Silver and gold ratios.

[intelligencer]

I just wanted to post some of my observations of the much discussed silver and gold ratios.

Anyone who has read more than a superficial account of the precious metals would know that historically the ratio of silver to gold has been 16:1. This isn't coincidental but rather represents an empirical appraisal of the relative abundance of the two metals.

It is at this point that things become muddled, as the 'consumption' of silver needs to be considered and therefore arguments of whether silver is worth more than gold or equal to gold come into play.

I would argue that to become equal to gold we must have consumed that 15 times excess of silver over gold. So in practical terms it means that 80 billion ounces (roughly 2.6 million metric tonnes) has to have been consumed forever. This just isnt the case.

So even if there are less above ground stockpiles of silver similar to gold it does not mean that all the silver is irrecoverable. More can always be mined.

The other thing people overlook is that if silver is more difficult to find, then the same applies to gold. Finding and extraction of remaining gold is just as problematic as silver, if not worse since the metal is less abundant to begin with - on average you're 16 times less likely to encounter gold.

 

[Matthew 26:14]

If you read carefully what the "pundits" say, their phrase is very specific which is usually something like "gold reserves are more than silver reserves". Which may/may not be true but lets say it is.

It really is an irrelevant because the amount of known and estimated recoverable silver below ground is many times more than that of gold.

 

[SilverSale]

A bird in the hand is worth two in the bush.

 

[Silverthorn]

Yeah I think the 1:1 is overly optimistic anything under 20:1 would be great. Been thinking about the GSR and I figure silver will rise to a price where its economic to mine silver without regard to the base metals it may be associated with. That is the base metals are a side benefit rather than silver being the side benefit. What that price is I don't know.

 

[donpaulo]

I have personally concluded that I will not even consider moving my silver until we see 25:1

at that point I will start musing about a swap, how it could be done and the best way to get it done

however IF it did get to 25:1 one has to consider that the momentum is in silver's court...

the trend is your friend

right ?

 

[euphoria]

I have thought about this also. For me I think will transfer 15% of my silver to gold if GSR hits 20. another 40% % when it hits 15, 40% when it hits 10. 60% at 5. and 80% at 1. 90% at 0.5. So if you started with a 1000oz of silver your final result would be like.

GSR AG Total % AU Total
25 1000 0% 0
20 850 15% 7.50
15 510 40% 30.17
10 306 40% 50.57
5 122.4 60% 87.29
1 24.48 80% 185.21
0.5 2.448 90% 229.27



of course everything is subject to the times. But Whilst I do not want to trade all my silver for gold, anything below a GSR of 16 is only temporary until Mine production can pick back up again

 

[thatguy]

GSR is increasingly important if you think peak oil is a factor, mining may be prohibitively expensive thus making above ground stock piles more valuable. Price to recycle and refine also increase as these are dependent on cheap energy oil produces. If peak oil is bad enough current stock piles may be it... thus if silver is rarer then gold it may achieve 1:1 (quite a few ifs there though )

Of course if you do not believe in peak oil then if silver does become expensive to use a relative term then purely silver mines could ramp production. Then you have to take into account that silver is often a by product and increasing silver in these mines means increasing the prime product. This maybe fine in an upturn but during a down turn it is not feasible. I do not know the ratio to silver only mines to silver by product mines

 

[Yippe-Ki-Ya]

If you read carefully what the "pundits" say, their phrase is very specific which is usually something like "gold reserves are more than silver reserves". Which may/may not be true but lets say it is.

It really is an irrelevant because the amount of known and estimated recoverable silver below ground is many times more than that of gold.

That may be true, but who will be recovering that silver??
As far as i know there are very few primary silver mines in existance

 

[Yippe-Ki-Ya]

So even if there are less above ground stockpiles of silver similar to gold it does not mean that all the silver is irrecoverable. More can always be mined.

Same comment applies here - mined by whome?

 

[intelligencer]

So even if there are less above ground stockpiles of silver similar to gold it does not mean that all the silver is irrecoverable. More can always be mined.

Same comment applies here - mined by whome?

Not mined by whom, but mined at what price?

It will be mined. As long as there are humans, and as long as there is an incentive, it will be mined.