![]() With the number pushing the upper limits of what we've seen historically, right now is the time to consider your strategy and whether you should take action. My guess is that you're likely sitting on what you had, plus whatever you've accumulated, since my last article on the ratio. In other words, your original 100 oz of silver, traded for 1.64 oz of gold when the ratio was 55/1 in early 2013, would have doubled your gold position through this simple long-term approach. If you were to trade your 110 oz of silver for gold at that point, you would receive about 3.3 oz of gold for your trouble. But, rather than getting out of control with wild thoughts of massive ratio bumper crops, let's just go with 30/1. ![]() If it's volatile enough, we may even touch 20/1 again. It's more a matter of knowing that it almost certainly will eventually, and being ready, regardless of when.Īs history tends to rhyme, we can expect the next swing to reach close to 30/1. We don't have to wonder if the ratio will swing in the next year or so. By positioning yourself in such a way, you're prepared for the next upswing, whether it's next month or next decade. After fees, if you trade your Au for Ag, you should have at least 110 ounces of silver. Even if you don't think you'd be ready to sell your gold at $5,000 or even $10,000 per ounce, such a strategy is sound, since it simply focuses on increasing overall ounces in the long run.Ĭonsider if you made the small trade we just discussed, or even if you start out with 1.64 oz of gold now. With these factors in mind, considering that the gold to silver ratio is approaching 80/1, investors should seriously consider trading their gold holdings for silver. But such a philosophy does lend itself to trading within metals, increasing one's position by simple swaps, and adding to positions on dips whenever it's prudent. In this case, one does not trade in and out of metals. Some claim that precious metals, especially gold, are not investments, but rather provide insurance - a kind of currency insurance I suppose. But if you're trading bullion or into junk silver, you should have made a comfortable gain in your position through this simple strategy. Of course, if you have semi-numismatics, then everything changes. In other words, without any real risk in ounces, and if one had been silver- heavy at the time of my previous article, an increase in total ounces of 10% could have been realized simply by trading your silver for gold then reversing that position now. Today, with the ratio exceeding 75/1, that 1.64 oz of gold would fetch about 110 oz of silver, even after your supplier takes a 10% cut. But recent pressures have affected the ratio, so that it more commonly swings between 30-80/1. At one time that would have seemed like a ludicrous trade, since historical value averages are in the 18-20/1 neighborhood. But the ratio seemed to indicate the opposite - that we needed to get back to 70/1 before weak hands would shake out and strong buying would resume.įor the sake of argument, however, consider this: If, at the time of my previous article, someone would have been willing to trade their 100 ounces of silver for an equal amount (speaking in value terms) of gold, minus 10% premiums, they would have received about 1.64 oz of gold. Like many gold-bugs, I "felt" that metals should go back up. To be fair, due to the fact that the ratio was sitting roughly in the middle of its modern day fluctuations, it was hard to make a decision as to whether one would be better off in Au or Ag. It's looking like it's about "that" time. So I chose to simply let it sit until it was time to take action. And the data I presented should have been enough to help someone evaluate the possibilities without any need for argument. ![]() Of course, arguing the point when the ratio seemed somewhat anemic would likely have been futile.
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