Gold-to-Silver Ratio Soars By Most In 2012

Tyler Durden's picture

From the open of the US equity market day-session, gold and silver have diverged aggressively. Gold is notably outperforming silver - in fact today is the biggest jump in the Gold/Silver ratio of the year. The Gold/Silver ratio has also retraced upwards to its 50DMA. It seems there is overall pressure on precious metals post-Bernanke but the relative preference is for Gold so far.


From the start of the US equity day-session, gold and silver have diverged...


Gold/Silver ratio jumps by most in 2012 to catch up to its 50DMA...


Charts: Bloomberg

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MeelionDollerBogus's picture

I fully expect this event to happen - but you'll first see "out of inventory" even if it's not true before some places are willing to admit they will sell for a higher price. They're shit-scared of it.

GubbermintWorker's picture

I started reading this and then saw it was the troll known as MDB!


Carry on troll.

redpill's picture

It was one of his subtler efforts.

trollin4sukrz's picture

 "I can't say whether it will be next week, or next month, but it's coming."


Yep, just like in the 80's when it boomed and busted.. If you can't eat it, dump it and buy farmland and learn animal husbandry or be one of the unlcky ones the bible talks about.


Ezekiel 7:19



otto skorzeny's picture

"animal husbandry"-as long as I am the husband and not the wife-bahhhhhhhhhh

trollin4sukrz's picture

Get a place in Montana where they are beef fed and sheep bred.

SAT 800's picture

Yeah, I'm not really to up-to-the minute on the "Animal Husbandry" thing; but it sounds kinda kinky to me. My high school counselor was kind of confused after he got done administering all his tests to me; finally he said; well you can be a great success in anything you choose; except farming. I asked him why not farming? He said, because you'll be bored to death. But seriously, folks; The only thing I can say in response to this Silver price is BUY THE FUCKIN SHIT OUT OF SILVER. I had to do it; the devil made me do it.

DoChenRollingBearing's picture

While I look at the gold:silver ratio, at this point it is not too relevant to me.  Gold is what I prefer, although I own silver too.  The ratio itself implies what others think as well (even though they ARE paper PM prices).

I read from time-to-time that many say that "at some point" they will turn their silver into gold, especially if/when the GSR drops.

And yet, I NEVER read that people will turn their gold into silver.  Not even once.

PiratePawpaw's picture

Good point. I think that is partly because gold is generally the leader of the two and silver or "poor mans gold" generally follows.

If gold start to climb, silver usually lags so the GSR widens. Then silver catches up. If and when a peak is hit; it is likely that gold would drop first while silver leveled off. This would drop the GSR.

I think most of those talking of turning silver to gold are thinking about this. I would likely trade some silver if the GSR hit 20; but only for phys gold, not paper.

Beam Me Up Scotty's picture

"If and when a peak is hit..."

I don't think there will be a so called "peak" in dollar terms like there was in the 1980's.  There isn't going to be a Volker moment where they raise interest rates back into positive territory.  If hyperinflation sets in, are you going to cash out into dollars?  There could be a short term peak, if they let the Dow drop 50% for sure, and gold could get a big haircut, but so will food and fuel.  I'm not worried.

SAT 800's picture

I think there will be a peak; and it will be difficult to decide what to do with it. If it is really the pre-lude to hyper-inflation; then you want to ignore it; because actual hyper-inflation is a short term thing; the whole process in Germany was over in 14 months, or something; it should be much faster nowadays what with the dollar being the reserve currency and all the fiats being non-redeemable; the people in germany who ignored the peak and just held on to the gold coins did just fine because of course they could use them to buy "Rentenmarks"; which replaced the old mark. If it's not the pre-lude to actual hyperinflation than you would want to sell into it. All markets throw peaks; or go exponential; it's kind of built in. You'll have to figure out based on the general tone of the times whether people are actually going to repudiate the dollar. A lot of people in Mexico sold their Silver coins into what looked like a peak in the Peso Price; but it was caused by insider knowledge of the coming official de-valuation; so they ended up with huge losses. they got a "high price" in old Pesos; but it was worth shit in "new pesos"; So, you'll have to make a decision. At the present moment I'm predjudiced against selling into a peak because it could be followed by a "new dollar" or a "world credit unit" or whatever; that left you with egg on your face. In the event of an actual de-valuation; a new dollar, or whatever; the actual purchasing price of silver will be so high for so many months, or years, that you won't have lost a lot by being safe and not selling into the peak. In other words the exchange value of silver and gold will be quite high even in the new currency; because of the "shock and awe" of the de-valuation. Faith and credibility once squandered is difficult to recover, and that is what holds up the buying power of the dollar.  I believe it would be safer/ less speculative to ignore the peak; or only selling into it as necessary to maintain your budget if you;re funding your retirement from your metals holdings, for instance.  There won't be any big downside; after the peak. the 1980's had a clear cut cause and effect and we know this will not repeat; also; and I mean this very seriously, in depth; this is not 1980.

DosZap's picture

what with the dollar being the reserve currency

NOT everywhere anymore, and that is going to ultimately break the back of BeenybuX.

delacroix's picture

 In nicaragua today I had a hiking guide look at my dollars, like they were wooden nickels. he wanted to be paid in cordobas. probably because they can be spent without the need to be exchanged. I am well off the beaten path. so the issue was probably convenience.

laozi's picture

I turned half my gold into silver 12 month ago. My bet is on silver. That is where the real potential is to be found IMO.

AgShaman's picture

Before it's all over, you should be able to trade a portion of it and get some gold for free if you want to.

I see a GSR touching 10:1

At least I am planning for such an event. As a hedge, you can own both and trade the other direction if the GSR flirts with it's top again. I'd love to see 100:1 again and dump some "yellow" for something better and later swap back.

Hold one or hold both, but by all means hold something

Talleyrand's picture

For the serious stacker (vice speculator), I would think that silver might present certain storage and logistical problems. The weight and volume - even if we were to see 16:1 again - might make a compelling argument for gold.

Just guessing though. Had a few coins once but seem to have misplaced them.

SAT 800's picture

I've heard that there arithmetic is good for comparing things. If you divide the present price of gold by the low in 2001; and then do the same for Silver; you'll find that silver goes up more in percentage price than gold. Silver is in very, very, short supply. The total silver market is very small; small markets respond with higher price rises than large markets to similar changes in demand. And finally; human psychology. Is it easier to raise the price of gas if it's 2$/ gallon, or $10/gallon? Assuming the same percentage increase in price. Every retailer knows the answer to this question. $50/oz. Silver "Looks" cheaper to Billy Joe Bob, than $2,000/oz gold; so more buying pressure is exerted on the "lower priced" article. And so forth, and so on. There really isn't any counterargument; except the propaganda that Silver is an Industrial Metal. LOL. If you believe that one; well, good luck.

zelator's picture

"And so forth, and so on."

Marc, is that you?

MeelionDollerBogus's picture

This myth is busted.

This is what really happens to both prices at the same time:

2011 dec 27 gold 07 | 10 years gold vs silver scatterplot

2012 06 24 scatterplot gold vs silver 10yr 03 | goldpricemodel

2011 dec 27 gold 08 | goldpricemodel | silver gold scatterplot

Pardon my mis-spelling: the date is locked on the upload & the image has the word 'scatterplog' burned into it pixel by pixel. Oh well, fuck it. I prefer my predictive uploads to show the date so that others can't say I just went backwards & didn't actually snag it ahead of the real price action. It is what it is.

2400 GOLD BY 2013 September

s2man's picture

I already turned my gold into silver when I realized gold would be useless in bartertown.  Sure, gold is a good preserver of wealth, but you'll need someone verify/assay it in order to sell or trade it.  Every Joe knows recognizes a 90% silver coin for what it is...

Now you have heard it, Do Chen  :)

MeelionDollerBogus's picture

no less reason to assay silver than gold. Plus some fools might think anything shiny & not colored is silver. I wouldn't be some are fools. Nothing on Earth looks like gold. It's an easier choice for me. It's simply worth so much for a tiny quantity that barter becomes challenging unless you cut very small pieces. However for large / expensive services gold is deal for bartertown.

SAT 800's picture

I already turned my gold in for Silver; a long time ago; let's see; roughly about twenty two years ago. Okay; now you've heard it once. But the real fun for me was trying to convince people to buy silver at $4.35/oz. I picked middle aged white men with money to save and protect; who were semi-sophisticated; they all had stock market accounts, two of them had small businesses; one of them was an active day trader in the stock market. Guess what? No deal. I was told to go away and stop bothering them with my crazy ideas about $20/0z. Silver, and stock market crashes, and all the rest of out of consensus BS I wanted to tell them about. Nothing will convince a human being more certainly that something is a bad investment than a low price. If the price is low, it means "everybody" knows it's no good; so there. Thinking finished. Miller Time. Problem? Everybody is almost always wrong. Only the 1% of the people who are willing to check up on a few background facts and do their own thnking are ever right; and in on the beginning of the big bull markets. Everybody else is busy being comfortable believing what everybody else believes; Silver! Why, that's useless; you can do nothin with it; it don't pay no dividend; you're a crazy feller, get out of here. Very interesting experience.

SilverRhino's picture

There is 170,000 tons of gold (known) floating around there.   (various sources) 

Known WORLD Reserves of silver are only at about 530,000 tons.  That's everything ever mined, minted or even detected in the ground.

I'll keep buying silver.  



Gold information -

EDITED: Updated for 2012 data 

WmMcK's picture

I will turn some of my gold into silver (again) if the GSR goes back up to 57.48 and vice versa at 48.36.

There you go.

MeelionDollerBogus's picture

fiat for gold, fiat for silver. Trading out gold for silver is an emergency move and/or a post-currency move. By all means when gold & silver are the standard accepted coinage of the realm(s) I'll trade one for the other. For the time being PAPER is what should go, I'll adjust how much excess of gold or silver I take in based on a combination of conditions.

Buzzworthy's picture

MDB is actually telling us the truth here.  There will likely be a severe drop in precious metals before an exponential move higher.

SmallerGovNow2's picture

Bingo, I've got my hand on the shift lever ready to put the truck in reverse....

SAT 800's picture

Well make sure you get the tailgate lined up with the loading dock before Joe and Jane Baby Boomer start pulling the 375Billion dollars they put into Bond Funds in the last 90 days out of there; due to failure to perform; because as sure as chickens have two wings, they aren't going to buying any more stocks with that money; and some of it is going to be lined up right there beside you on the loading dock.

MeelionDollerBogus's picture

2400 GOLD BY 2013 September

Down to the last 4 weeks, likely, so I'd say it's time to start averaging into 1600/oz and watch it pop. After all, 1696 now, 1600 4 weeks from now, do you really want to wait when March is 2000, 2100, September is 2400 ? Is that a reason to just sit and wait?

augustusgloop's picture

I'm afraid worse that gold going down is yield on the 10 & 30 year going up after Fed announcement. Much scarier. The dreams of xxx are abut to <be> shattered into tiny pieces by the collapse of the xxx  bubble. 

SAT 800's picture

That's right; there was a long discussion about the direction of the thirty year here yesterday. It's now become clear, to those who have eyes, as it says somewhere in some famous book, that we're pumping up the dollar bubble itself; and not just the housing bubble or the stock market bubble; notice today alongside the anouncement of the fall in price of the long term treasuries; the anouncement of the new "dollar swaps"; in my humble opinion this is not a co-incidence; and the "need" to "help out" our European Friends with their Banking Problems has a lot more to do with this sudden decision to print billions of dollars of new money than Ben's "feeling your pain" about your job. 

Orly's picture

They've been doing that for months.  Why do you think the Euro has been so resilient in the face of certain chaos?  Check out the increase in the Fed's "Other Holdings" over the past several months and you'll come to the conclusion that these are Greek and Spanish Government bonds.

Alan Grayson asked what happened to the half-trillion dollars way back in the beginning of this mess.

Same thing.

On steroids.


SAT 800's picture

Yes, dear, I understand this is an on-going process. I don't think that makes my attempt to comment on the present, sudden, significant, jump in money printing useless or pointless, however. You need to remember that some people actually believe Ben is doing this so they can get a job.

Ghordius's picture

" the conclusion that these are Greek and Spanish Government bonds". Are you sure there aren't German and Dutch and others in the mix?

Which means the FED is for the first time accumulating FX reserves.

No wonder the Cities pushed so strongly for EuroBonds.

No wonder the eurozone is pushing back.

ozzz169's picture

Your missing the point here, the point is not the bubble in gold, but the bubble in leverage (caused by years of artificially low interest rates), what will cause deflation when it pops, yes the fed control p is inflationary, but we are overleveraged by 20-30 Trillion, (350% of GDP compared to 150% GDP historical standard, which seems to be the natural sustainable level of leverage).  So the problem is they are just bubbling up everything making the problem worse, by not letting the bubble pop and taking the medicine quick.  we are going to see a 20 year period of deleveraging with slow to no growth.  which is not bullish for gold, rather its bearish.  the bottom line is over the last 30-40 years we should have massive deflation due to decreases in scarcity and increases in productivity, but instead we have had massive inflation already, so that malinvestment must be taken out of the economy, and deflation will happen. 

The saddest thing is that instead of just doing it like a bandaid and moving getting a recovery the fed is dooming us to 20+ years of pain.  Fed caused the problem, fed made it worse (the treasury bubble is another result of this as well as the deficit, if rates were real the government could not overspend like they are they cost of the debt would be much too high. thanks alan/ben etc)

SAT 800's picture

BUBBLE IN GOLD. Let's have this discussion at around $5,500/oz. I don't want to hear no shit about bubbles in gold at this point.

Tango in the Blight's picture

Buy AAPL and USTbills. Our guru MillionDollarBonus_ says so!

SilverRhino's picture

I don’t get upset anymore at the continued attempts to push silver south.   I just buy the dips.   

Silver is a LONG term play.   The propaganda, the manipulations will all continue to work and they will keep the price low.  
This will work, right up until it doesn’t. At which point the price will DETONATE .....  

If silver  goes to $500 (hypothetical), would you rather it make a steady slow creep or just explode one day?   Since I am not anywhere finished buying, I’ll be happy with the non-skyrocketing price.

San Diego Gold Bug's picture

MDB is correct, from a purely trading aspect, the metals are very week and headed lower.  Buy phys when you can, but for traders a print of low $1600's is expected.  The Boyz will take advantage of this weakness, just like last December..check the chart, they will pound the prices.  Buy this dip if we get it.  This dip will be the last at these prices.

Merry Christmas


MeelionDollerBogus's picture

2400 GOLD BY 2013 September

merely discount pricing in the next 4 weeks before the sharp rise to 2000 and higher.



Fucking morons.

How can you have any gold if you don't eat your paper fiat ?

Million Dollar Bonus strikes again. 

trollin4sukrz's picture

They cast their silver into the streets, and their gold is like an unclean thing. Their silver and gold are not able to deliver them in the day of the wrath of the LORD. They cannot satisfy their hunger or fill their stomachs with it. For it was the stumbling block of their iniquity.

DosZap's picture


Their silver and gold are not able to deliver them in the day of the wrath of the LORD.


NOT there yet bro...............................


News flash there religion boy. Paper investment will have you burning in hell long before metals holders get warmed up by you going up in flames.

Long on Burning Man shares........................ bitchez. 

Piranhanoia's picture

was it Fred Flintstone or Barney Rubble that said that?

trollin4sukrz's picture

Comes like a thief in the night,, just saying.. do you KNOW the day the thief comes?

DosZap's picture


Comes like a thief in the night,, just saying.. do you KNOW the day the thief comes?

NO one knows the times son, you know that.

BUT certain things have to happen before the DAY you speak of.THat are in motion as we type, but NOT quite yet,'Now if your talikng the Catching Away, total diff ballgame from the Day of The LORD.

Relentless's picture

Any thief comes in the night near me and mine is going to be met with lead and steel