I need some advice and or encouragement.
Title says it all. Silver seems stuck in the doldrums. We keep stacking it because we can't afford to stack anymore gold. But our ratio is getting all out of alignment.
Two depressing things about this:
1) We averaged into our silver too high during the first part of this year, made the bulk of our purchases > $36.50. It's taking forever to average it back down.
2) I am no longer sure I believe silver will ever be "money". Particularly when you look at the recent few months, you can see the disconnect between gold and silver with gold moving higher and silver stagnating along with other commodities.
Should we swap a good portion of our silver into gold even though the ratio is not good? Should we just hold onto it in a blind hope that someday everything will work out and the ratio will improve? We don't want to be in a position where three years from now gold is $10k/oz and silver is $50/oz and some joker we're trying to pay says to us, "Oh, you were 85% invested in silver? Ooops".
What to do?
And then the ratio would be very good to change into gold. The gold silver ratio will be getting better (lower) already from May 2012. In September-November 2012 gold silver ratio will be below 40, 30 for 1 month , similarly -around 40:1 in January-May 2014. After that, there is long way for low gold :silver ratio.
See these charts:
Silver (accurate long term since March 13, 2011):
Gold silver ratio-press on chart, then left upper corner to zoom :
Don't be depressed my friend. Be patient. You are right, silver will never be money. Unless the lights go out permanently. But it is a store of value and it will go up with inflation. What makes inflation? well currency devaluation is one ingredient. The problem now is stagflation. The world economy is stagnating and being inflated through the monetization of debt. The industrial demand for silver accounts for 40 to 50% of its value. Demand is falling off with worldwide recession. So silver is stuck right now while gold continues to look good. Marshall your resources and look to buy again under 27. When the ratio becomes more favorable, switch to gold.
Just about the time the true believers are ready to throw in the towel is about the time when Ag should make another move.
That being said, I'm way heavier on gold, precisely for the reasons you've stated. Just swapped more silver for gold just this past weekend as a matter of fact, even though the GSR was like 51:1 ish. Mostly just because I found some gold in my LCS that I really really liked, and had no cash for it. It's not like I'm on a serious silver for gold swapping jihad or anything.
Bottom line is don't let your ratio get out of whack. Find a balance that you like and stick to it. Buy gold even if it's small pieces, to get back toward a balance.
The good stuff starts about 16 min.
If you can't see the forest through the trees, stop and back up. Go back to the 10 year charts starting in 2003 and just extend those general trendlines out 5, 10, 20 years as what to expect. Ignore all the rest of the noise about how it's going to $6 or $600....it's just nonsense.
Nope, you can pretty much bet your whole stack silver will never be money again. But that doesn't mean a nice sack of old coins is a terrible idea.
And just so you know, I forgot about silver too. Took a shovel, dug a hole, and buried those $16-$25 spot memories I once had for a long time. I would not wait for $25 physical silver. You might play paper down that low, but I doubt physical. Better to have it today than kick yourself tomorrow.
This is nothing new to the Ag market... its the nature of it to be more volatile. But that's what makes it interesting. And that's why I'm in the market. You will be handsomely rewarded to the upside for sitting in the gulag on the downside.
In the meantime go check out Sprott. And then some Bill Murphy at GATA, who has a price target of $60 for Ag next year... So the party is just getting started as far as I'm concerned.
Don't get all emotional now, you bought Ag because you wanted it right? Now that it's on sale you don't like it? Count your ounces man. Ounces. Keep stacking and stay disciplined... don't let the silver bull shake you out!
Have faith. You certainly know the EE has push silver down twice this year. But silver keeps pushing higher. And, the EE is running out of bullets. You can save Europe and kill metal prices. I would look for a more favorable GSR and swap some silver for gold. I have a stack of silver, and gold. I intent to swap my silver for gold when the ratio is better.
The dollar makes me more depressed.
Thanks for the advice and encouragement.
I guess the most frustrating part is that we didn't have more gold and now we can't swap into gold at these ratios without taking a big hit.
I don't know if it's worth taking the hit and swapping now or should we just hold on longer and wait for a better ratio? Hard decisions.
Silver to gold ratio is high and you want to trade? No way man! hindsight is always 20/20 but you need to have the foresight to see a good deal here. The silver to gold ratio moves in waves up and down. You want to buy silver when the ratio is at its highest point so that when the wave corrects you will be in much better shape. When the ratio is at a very low point then dump your cash back into gold. DO NOT SELL/TRADE YOUR SILVER! this is the exact wrong time to do so! I know waiting is hard but nobody makes any money following the crowd. This is a long term investment for you is it not? Be smart.
What we have here is a very typical raid on metals at the annointed 11 a.m. hour. This plus OE week, plus Tuesday yields high volatility in my book.
Buy all decent weakness in increments, and by all means always sell all spikes during this week imo. Price is completely insincere now and is being gamed for options.
Granny on her 3rd round of purchases low. Who knows where price goes intraday? Waterfalls are bought by banksters they are not sold. They are also initiated by banksters this is why selling spike ups this week is key imo. Because there are no guarantees how low price can be driven on news or via OE racketeering manuvers one must always buy small and in increments to outlast the manipulation. Its like the Pacquio-Marquez fight. You have to have something left in the tank for the later rounds or out you go imo.
Did I see right. Is Keith back in the House?
Going out on a limb here. Silver rallies in the second half of a Gold rally or gold and metal strength. That is when it picks up steam. This indicates its break out and up could be coming to a theatre near you soon enough but not before frustrating all 'breakout' momentum players.
Also noting that the globalists Monti Python of Italy and the clown installed in Greece are there for one reason. To make sure these countries remain indebted further and further to the Banks. This is done now via money printing. Would not be surprised to suddenly 'learn' that the ECB via racketeering operations out of the IMF is already printing and buying its own crapola. Feeding like the dog that it is on its own feces. Turning around and sniffing the pile and then chowing down.
Granny selling 1st tranche of DGP and EXK into this bounce off bankster fright-wig mid day selling bottom. Nothing special, just trying to keep it simple.
Dolf is trained not to eat his own crapola, unlike the ECB.
What is your current G/S ratio, Pablo? If you don't mind sharing.
I'm at about 60/1 thanks to Blythe and the cartel holding down silver for me.
I'm really not concerned with the ratio as much as I am having a physical supply that matches my labor output. My goal is to have an entire years worth of fiat income backed by silver alone.
I own gold as a hedge to the above and also to fulfill my Scrooge McDuck fantasy one day. ;)
Our ratio was initially supposed to be 25% Gold 75% Silver.
Then I decided I would probably use the silver as a means to leverage into more gold at a good GSR and "end up" as mostly gold (since in a total apocalypse scenario I think Eric O is right on the money with holding mainly gold).
Our current ratio now is more like 10% gold and 90% silver, and getting worse. This is mainly because we don't want to throw away the money on the exhoribant premiums charged for fractional gold (1/10 oz has ~$25 premium), it's also financially easier for us to make regular small purchase of a few oz silver than less-regular gold purchases.
Did you catch my post the other day about Fractional Gold? It generated several good follow up comments.
Not that I came to any firm conclusion or anything. Mostly just threw up my hands and said to have a little of everything.
Also had a big post this morning about gold vs silver. Between the two, you've pretty much got all my thoughts on it.
Thanks man you're the best.
When I attended university I took lots of history classes. I have never regretted taking them, as they laid a foundation for my understanding of what is happening in the world today. I am always amazed at folks who dismiss history's lessons.
In Mexico, Central and South America, India, China, and Europe, silver was money. I did not take any Middle Eastern or African history classes so I do not know if that was so there as well. Even in the USA silver was money until Richard Nixon said it wasn't. There are thousands of years of history that says silver is the common man's currency, minted by their respective governments, traded and trusted by millions of people.
The silver/gold ratio historically is 17 ozs. silver to 1 oz. gold.
What we have today is without president historically. It is a laughable ratio.
I disagree with those who say silver will never be money again. Thousands of years of history says otherwise. Just because it has industrial uses means squat.
I believe we are being given a fabulous opportunity at these ratios.
Don't be discouraged. Thousands of years of history backs up your decision to acquire silver.
When the SHTF, and it will, your 90% silver dimes, quarters, and half dollars will be invaluable, as will your Maples and SAE's.
And please don't trade your silver for gold at these ratios!!!!!!!! Sit back, take a deep breath, and let history be your guide.
Pablo, I believe you very wise by accumulating silver at this time.
it is always darkest before the dawn!
It has been frustrating lately, but that is the picture they want us to see.
Hold tight, they are making you doubt yourself, but you have been right all along!
The Sprott news about increase his silver should buck you up. Taking that much liquidity out of the market will certainly move prices higher, and the GSR down. Your time might becoming, my friend.
Recently a week ago, Jim Rogers said the one advice he has is: BUY SILVER. Yes, he likes agriculture, but for the average guy, it's buy silver.