GSR

Quick question as my maths is fuzzy this morning!

Why buy gold now in preference? (I actually have been well-skewed to gold in any case, but recent silver dips have had me ... well .. "dipping in"!)

Is that because gold is the ultimate play, and is well-priced right now and when silver rises in price (notice I did not say "if" haha), we swap the silver (or a proportion) into gold?

Why not keep buying very very cheap silver (supposedly)?

Looking for some insights, as right now, I'm still buying both!
 
goldpelican said:
I don't know if technical analysis is valid on the ratio itself - wouldn't it be more relevant to do the analysis on gold and silver separately, and forecast the GSR that way? The ratio hides the rise and fall of which metal relative to the other is causing a change in ratio.
Click to expand...

That's a good question GP, and frankly I cannot say for certain one way or the other!

My gut feel is that yes it is a usefull tool, although as you mention: vagaries within the market for either gold or silver can potentially make it irrelevant - that said, there are definately trends within the GSR, and I have been able to use that to my advantage in recent months. Compared to many of you I am a total noob in the PM space, although IMHO knowledge is power, and I'll try to extract info from whatever source I think might help.

so far watching the GSR has helped me a lot (e.g. I "guessed" the recent GSR bottom of 48, and converted Ag I bought in December to Au with an effective cost of $1450 an Oz for the Gold - might be a fluke, but I'll take whatever small wins I can get in this life :D

In my own stumbling way I try to keep an eye on fundamentals, macroeconomics, the various metals charts, sentiment, COT Charts, Lease Rates, and ask my dog, :P as well as keeping an eye on the GSR

I don't know if there's any "validity" to technuical analysis of the GSR, although using it as part of my decision making process has enabled me to much improve my cost average for both gold and silver I hold - that may just be a co-incidence although as it's been helpfull so far to me I'll keep on plugging away :)
 
Macros_The_Black said:
Why not keep buying very very cheap silver (supposedly)?
Click to expand...
Judging by those charts, and the last 20 years, the GSR is only going to get bigger (closer to 1:70).

If you buy gold now, whilst it's 1:55, then trade into silver at 1:70, you'll get more silver for your $
 
Macros_The_Black said:
Why buy gold now in preference?
Is that because gold is the ultimate play, and is well-priced right now and when silver rises in price (notice I did not say "if" haha), we swap the silver (or a proportion) into gold?
Why not keep buying very very cheap silver (supposedly)?
Click to expand...

Say you look at a choice now of buying - same price in $:

option 1:
1 oz of gold

or option 2:
54 ozs of silver

If you choose the gold, and if the gold:silver ratio breaks and moves higher to say 80, you made the right choice because you then could sell it and exchange for 80 ozs of silver instead of of the 54 you would be holding if you had chosen option 2

If the gs ratio breaks and travels lower to say 40 it would mean that option 2 was better because you could now buy your 1 oz of gold and have 14 ozs of silver left over (ignoring transaction costs)

Is that because gold is the ultimate play?
Click to expand...

Yes, good question, but if you think gold is the ultimate play, theoretically it would still be better sometimes to buy silver than gold (or platinum than gold) because you will end up with more gold if you're nimble enough to do the right exchanges, and can pay enough attention to it, and if the transaction costs don't become an issue. Maybe your approach is better - buy silver when it looks cheap compared to gold, and vice versa, and accumulate both. But that's a non-trading approach.

But that still begs the question will gold get more expensive in ozs of silver or will it get cheaper? Which way is it trending practically speaking?
 
RetardedMonkey said:
Macros_The_Black said:
Why not keep buying very very cheap silver (supposedly)?
Click to expand...
Judging by those charts, and the last 20 years, the GSR is only going to get bigger (closer to 1:70).

If you buy gold now, whilst it's 1:55, then trade into silver at 1:70, you'll get more silver for your $
Click to expand...

OK thanks RM, I see what you guys are meaning.

I've never been one for "you should buy silver because the "historical/physical availability ratio *should* be 16:1" - markets change, uses change etc

So this could mean we have a "two-speed economy" of SS members?

Those who are buying gold because the 1:55 will only go higher.

And those who are buying silver, 'cos it's cheap AND *one day* will go to da moon and restore faith in the GSR.

Who will be the winner*?

Stay tuned ... gonna be a bunfight haha!





* Those who buy both? :p ... pffft. Fence-sitters!!!
 
Thanks finicky - I was replying to RM just then while you were posting - very helpful both of you, cheers!

I'm definitely not a trader, but I am willing to have some play in asset allocation to maximize $$ movements in pricing. While I've been buying both, it's swung around depending on what I saw as the "cheap PM" at the time!! So more recently it's been silver, but the last dip in gold (ummm before last night that is) saw me stacking up - so it looks like I'm doing what you pointed out I'm doing ;) ie Accumulate both and plan for cash on hand to take advantage of cost-averaging.

Great posts, thanks to everyone who is active here, I wouldn't be as confident in this part of my investment strategy in PMs without it!
 
Macros_The_Black said:
RetardedMonkey said:
Macros_The_Black said:
Why not keep buying very very cheap silver (supposedly)?
Click to expand...
Judging by those charts, and the last 20 years, the GSR is only going to get bigger (closer to 1:70).

If you buy gold now, whilst it's 1:55, then trade into silver at 1:70, you'll get more silver for your $
Click to expand...

OK thanks RM, I see what you guys are meaning.

I've never been one for "you should buy silver because the "historical/physical availability ratio *should* be 16:1" - markets change, uses change etc

So this could mean we have a "two-speed economy" of SS members?

Those who are buying gold because the 1:55 will only go higher.

And those who are buying silver, 'cos it's cheap AND *one day* will go to da moon and restore faith in the GSR.

Who will be the winner*?

Stay tuned ... gonna be a bunfight haha!





* Those who buy both? :p ... pffft. Fence-sitters!!!
Click to expand...
GSR of 1:16 is bullsh*t in my opinion.

Too much has changed since this 'historical' (read: 1600s) ratio.

Do both and buy some silver/some gold. Sure you might not make the right choice on one, but you'll make the right choice on the other to swap ;)
 
Macros_The_Black said:
Accumulate both and plan for cash on hand to take advantage of cost-averaging.
Click to expand...

yes, and don't overlook the platinum option. I was looking at this long term ratio chart in response to this thread. The platinum/gold chart in red is 30 years duration and most of that time platinum has been well above the 1:1 level. it gets as far as a double. The chart finishes in 2005, but we know in the subsequent six years Pt has declined but stayed above 1:1 until just recently. How much further can it go, and isn't it an optional buy for goldbugs on what is likely to happen in the not too distant future? That is, the reasonable prospect in a year or few years to come that an oz of platinum will buy more than an oz of gold, and maybe even two ozs of gold with patience.

Looking at the 3 yrly chart of plat:gold I can't be sure whether Pt:Au is still in a bigger downtrend since 2010 or whether it bottomed in Jan 2012 and is now just in a short term pullback in what is overall an uptrend. But put it this way - can buying platinum at under the price of gold be too disastrous a decision when considering the long term chart? Only if they all crash I think, which is always a chance.

platgoldratio.gif

Source:http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/charts/AuPL.gif
 
RetardedMonkey said:
GSR of 1:16 is bullsh*t in my opinion.

Too much has changed since this 'historical' (read: 1600s) ratio.

Do both and buy some silver/some gold. Sure you might not make the right choice on one, but you'll make the right choice on the other to swap ;)
Click to expand...

I tend to agree about the 1:16 ratio. But then at other times I realise a lot about this is very psychological. The markets do what on the face of it appear to be very irrational things for a long time.

It could be that it (the 1:16 ratio) becomes a psychological limit, kind of like if enough people believe it, it becomes true, at least for awhile. Though I am not in any way confident that the ratio will ever return there. Just speculating.
 
finicky said:
Macros_The_Black said:
Accumulate both and plan for cash on hand to take advantage of cost-averaging.
Click to expand...

yes, and don't overlook the platinum option. I was looking at this long term ratio chart in response to this thread. The platinum/gold chart in red is 30 years duration and most of that time platinum has been well above the 1:1 level. it gets as far as a double. The chart finishes in 2005, but we know in the subsequent six years Pt has declined but stayed above 1:1 until just recently. How much further can it go, and isn't it an optional buy for goldbugs on what is likely to happen in the not too distant future? That is, the reasonable prospect in a year or few years to come that an oz of platinum will buy more than an oz of gold, and maybe even two ozs of gold with patience.

Looking at the 3 yrly chart of plat:gold I can't be sure whether Pt:Au is still in a bigger downtrend since 2010 or whether it bottomed in Jan 2012 and is now just in a short term pullback in what is overall an uptrend. But put it this way - can buying platinum at under the price of gold be too disastrous a decision when considering the long term chart? Only if they all crash I think, which is always a chance.

http://www.sharelynx.com/charts/AuPL.gif
Source:http://www.chartsrus.com/chart.php?image=http://www.sharelynx.com/charts/AuPL.gif
Click to expand...

Ah thanks finicky - I had previously looked through the platinum thread and couldn't see a clear case (other than fascination with a possibly undervalued precious metal as an "alternative"). But you show that there is a valid approach to platinum purely based on the PGR (or is that GPR?). I have been stacking for protective reasoning - and I can easily "get" that the last who-know-how-many centuries, mankind has had a fascination with gold and silver, but gold more than anything, as a store/measure of wealth.

(NB. That's outside of large tracts of land/countries/large real estate holdings. But they can always be invaded/occupied.)

Whereas I couldn't see anything that made me think that platinum was valued the same way (it has been used in currency in Russia etc I believe yes?) - and outside of the general wealth protection, selling/trading platinum quickly would need a more specialised/knowledgeable buyer (IMO).

But ... if we use your tactic of a 1-5 year horizon for the GPR re-valuing, then it could be a medium term quasi-trading position, if only to go back to gold again (or silver) .... AND a possible hedge for the GSR going the "wrong" way to whatever one had predicted.

So in a nutshell: Another PM asset class that would perform independently of gold and silver.

Hmmm. Interesting!

Thanks again (from another Sunshine Coast stacker)
 
RetardedMonkey said:
alor said:
http://stockcharts.com/freecharts/gallery.html?$gold:$silver

there is a locked step, 10 boxes, so heading higher to about below 58, then all the way back to 49 again.

but looks as if the trend just reversed :) but hopping like a roo.
Click to expand...
Looks like we're heading to a higher GSR!
Click to expand...


I'm not so sure it's turned to head up at the moment, if anything at this point in time heading back down still seems a reasonable possibility to me.

That's what seems to be happening on the hourly chart :/


As always, time will reveal all I guess! :)


2410_gsr_may_2012_2.png
 
Just swapped back some gold to silver yesterday and got 55. I originally swapped at 49 and gained about 20 ounces which I'm happy with. It could go higher for sure, but I was done waiting. If a short term low is nearly in then a rise in price will see a fall in the ratio and would have worked against me.

I try and always remember ''bulls make money, bears make money, pigs get slaughtered''.
 
I try and always remember ''bulls make money, bears make money, pigs get slaughtered''.

Love that - and so true:lol:
 
BlackSheep said:
It seems to me that the GSR is potentially right on the cusp of turning (like just about everything while waiting for QE or no QE lol)

Yes the short term trend from march last year to date is up, however it is still (just) within the boundaries of the downtrend that started in Dec 2008, so I wouldn't rule out a turn back down to continue the medium term downtrend from here just yet....

http://forums.silverstackers.com/uploads/2410_gsr_may_2012.png

I've added a few hundred ounces of Ag during this dip, although am keeping powder in reserve just in case... if silver continues to fall from here it could possibly be a real gut wrenching fall, but would provide some mega buying opportunities!

However this is a US election year so who knows what TPTB will do to get back in... (QE anyone?)
Click to expand...

What is going on with the dates in that chart? It makes it look as though the low of around 30 occured in 2010 rather than last year...
 
Now.

Do I take the punt of trading some silver into gold, in the hope that the GSR will climb to 1:70, or hold onto the silver in the hope that this is the top for the GSR?
 
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