Buy Silver And Sell Gold Now

Buy silver and sell gold now - Frisby

- Gold should cost 15 times as much as silver
- Silver might have disappointed in short term – But it’s time to buy
- Editor's note: Silver has outperformed stocks, bonds and gold since 2003 (see table)

by Dominic Frisby via Money Week

For those of you with busy schedules who like to see arguments made in 280 characters or less, let me come straight to the point: the time has come to sell your gold and buy silver.

Got that?

Right. Now, those of you who are interested to know why I would make such an assertion, read on.

In an ideal world, gold would cost 15 times as much as silver.

Silver Britannia 2018 (VAT Free In EU and CGT free for UK investors

The gold-silver ratio measures how many ounces of silver it takes to buy an ounce of gold. If the ratio is at, say, 75, then gold is 75 times the price of silver and it would take 75 ounces of silver to buy an ounce of gold.

Geologists seem to agree that there is somewhere around 15 times more silver in the Earth’s crust than gold. Gold is therefore 15 times rarer.

In theory, therefore, the gold-silver ratio should stand at 15 – gold should be 15 times the price of silver. And until the 20th century, that was mostly the case. Indeed, there are many examples of nations which operated under a bi-metallic standard – the USA until 1875 being perhaps the most famous – where the exchange rate between the two metals was 15, more or less.

However, in the 20th century, as money and metal went their separate ways, that ratio of 15 has become an ever-more distant memory. One day it will get there again, the most ardent of silver bugs will tell you.

And on one day in 1980, it did – on 18 January 1980, silver went to $50 as the infamous Hunt Brothers attempted to corner the market.

But since then the closest it has been was 30, in April 2011, when silver touched $50.

Here, courtesy of our man in Australia, gold and silver data hound Nick Laird of goldchartsrus.com, is the gold-silver ratio since 1720.

Gold-silver ratio since 1720

You can see how the ratio was constant around 15 until the late 1800s, after which it became a volatile beast, climbing as high as 100 (in World War II) before coming back down to earth at 15, then repeating.

Even today, with gold at $1,320, at a ratio of 15, silver should be $88. It isn’t. It is $16.

Given silver’s historical relationship with money and the flaws in the fiat money system, many – including your author at one stage, until he grew cynical – thought that silver would “do a bitcoin”. But it didn’t.

Then there are all the industrial uses, particularly in electrics. Many thought silver would “do a lithium”, or a cobalt, or a uranium.

It didn’t. It flirted with such notions in 2011, but $50 proved the cap.

Silver is like a friend’s errant younger sibling – oodles of potential, but never quite delivering on its promise, beyond the occasional glimpse of greatness.

The bottom line is this: for all the beauty of silver, and for all its potential as an investment, an industrial metal and a precious metal, the reality is that since it lost its monetary role, it has never delivered on its potential for more than a few days in market extremis. When it was official money, that backing meant its value held; without it, the value does not seem to sustain.

Silver might be a constant disappointment – but it’s time to buy
But now, having properly put the boot in, I am going to tell you to buy silver. Not only that, I am going to suggest that you should even sell gold – which has been a much more reliable store of wealth – to buy it. My reasoning is simple: the gold-silver ratio has gone above 80.

This chart shows the gold-silver ratio since 1980. You can see that, on every occasion since around 1994 that the ratio has gone to 80, or just above (where I have drawn the dotted red line), the ratio has soon fallen.

Gold-silver ratio since 1980

It happened in 2016, in 2009, in 2003, in 1997 and in 1995.

The risk is that it carries on going up to the 100 area, just as it did in 1991. Given that the ratio has only done this twice in all recorded history – once in 1991 and once in 1941, during a world war – I suggest that the probability of this happening is low. And, if it does go that high, it will come back again within a year or three.

The likelihood is that the ratio will come towards the lower end of the “normal range” in the high 40s or lows 50s, at which point you switch out of silver and back into gold. But then the gold you sold for 80 ounces of silver, you are now buying back for around 50 ounces, so you’re ending up with a lot more of it.

The blue sky – or BS – argument is that silver goes back to 30, or even its historically and geologically-normal ratio of 15. One day it will. But don’t hold your breath.

More reasons to be bullish on silver
In the meantime, there is another development that adds some fuel to the bullish silver fire. That is the latest positions of the traders on the Chicago futures exchanges.

These traders are bracketed into three groups – the large speculators, the small speculators and the commercials. The commercials and, to a lesser extent the small speculators, are considered the smart money, while the large specs are considered the least wise of the three.

Nothing is so simple, of course. Nevertheless, the large specs (the uninformed money) are now net short for the first time since 2003. Back then silver was $5.

What’s more, every time since then that the large speculators’ net position has moved close to the zero line, that has proved to be a buying point for silver. All in all this is a very bullish development, given that the silver price is largely set in the futures markets.

It’s worth noting that the equivalent position for gold is not nearly so bullish. To be uber excited, you would want to see them both in alignment. Shucks. You can’t have everything.

There are all sorts of ways to buy silver. You can buy bullion from a dealer such as Sharps Pixley (although this can be VAT-able); you can buy an ETF from your broker; you can go to one of the online dealers who store it for you (Goldcore, Goldmoney, BullionVault); you can use a leveraged product; or you can buy one the silver mining companies.

I’ll re-visit this ratio in six months or so to see how it’s panning out.

Article from Money Week's excellent free daily investment email Money Morning


Editors Note: While silver has disappointed in the short term it has performed very strongly over the long term and in the last 15 to 20 years. Over a 16 year period, silver has risen 265%.

Since 2003, silver has outperformed stocks, bonds, property and even gold with gains of 12% per annum in dollars and gains of 12.8% in pounds, 11.1% in euros and similar gains in other fiat currencies.

Stocks and bonds have seen gains of roughly 5.5% per annum and gold in the same period has gained roughly 8% as was shown in PwC's recent research piece on gold.

We would not advocate selling gold bullion in order to buy silver bullion. By all means reduce allocations to gold and add to silver but we believe both merit a place in a diversified portfolio as a store of value and both will likely again outperform stocks, bonds and property in the coming years.

News and Commentary

Gold at 2-week low as dollar weighs, investors eye political tensions (MarketWatch.com)

PRECIOUS-Gold steady as political concerns offset rate hike fears (Reuters.com)

Venezuela gold reserve value falls 14 pct in 2017 (Reuters.com)

Stocks Drift, Dollar Drops Amid Political Turmoil: Markets Wrap (Bloomberg.com)

Bitcoin's ‘Death Cross’ Looms as Strategist Eyes $2,800 Level (Bloomberg.com)

The Many Uses of Gold (GoldSeek.com)

$500 million in gold bullion rains down on Siberia after aircraft cargo bungle (News.com.au)

Tons of gold fall from sky in Russian cargo plane blunder (VIDEO, PHOTOS) (RT.com)

Gold's relationship to interest rates isn't so simple - Kosares (Gata.org)

Forget Brexit – here’s the real reason the UK housing market is fragile (MoneyWeek.com)

Gold Prices (LBMA AM)

15 Mar: USD 1,323.35, GBP 949.24 & EUR 1,070.72 per ounce
14 Mar: USD 1,324.95, GBP 949.59 & EUR 1,071.35 per ounce
13 Mar: USD 1,318.70, GBP 948.94 & EUR 1,069.60 per ounce
12 Mar: USD 1,317.25, GBP 950.66 & EUR 1,069.87 per ounce
09 Mar: USD 1,319.35, GBP 955.21 & EUR 1,072.50 per ounce
08 Mar: USD 1,325.40, GBP 955.08 & EUR 1,070.39 per ounce
07 Mar: USD 1,332.50, GBP 960.07 & EUR 1,071.86 per ounce

Silver Prices (LBMA)

15 Mar: USD 16.52, GBP 11.86 & EUR 13.37 per ounce
14 Mar: USD 16.61, GBP 11.88 & EUR 13.42 per ounce
13 Mar: USD 16.51, GBP 11.88 & EUR 13.38 per ounce
12 Mar: USD 16.46, GBP 11.88 & EUR 13.39 per ounce
09 Mar: USD 16.49, GBP 11.92 & EUR 13.40 per ounce
08 Mar: USD 16.48, GBP 11.89 & EUR 13.31 per ounce
07 Mar: USD 16.65, GBP 12.01 & EUR 13.42 per ounce


Recent Market Updates

- Gold Cup At Cheltenham – Gold Is For Winners, Not For the Gamblers
- Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony
- Stock Market Selloff Showed Gold Can Reduce Portfolio Risk
- Gold Protects As Cashless Society Threatens Vulnerable
- Women’s Pension Crisis Highlights Dangers To Savers
- London Property Sees Brave Bet By Norway As Foxtons Profits Plunge
- Gold Does Not Fear Interest Rate Hikes
- RaboDirect Closing – Gold May Protect From Irish Banks Going “Belly Up Again” – Finuncane
- Silver bullion will likely outperform gold bullion going forward
- Gold $10,000? Goldnomics Podcast Quotations and Transcript
- Trump Risks Trade and Currency Wars – Protectionism and Economic War Loom
- Four Key Themes To Drive Gold Prices In 2018 – World Gold Council
- Is The Gold Price Going To $10,000? (Goldnomics Podcast 3)

Comments

SubjectivObject Fri, 03/16/2018 - 08:45 Permalink

cherry picked date ranges

most here apparently bought in 09-10

so calculating that average from 2011 to present is .... fugly

"past performance is not a guarantee of future returns"

stacking12321 Kokulakai Fri, 03/16/2018 - 22:17 Permalink

i've heard this argument before and i'm not convinced it's correct:

"Geologists seem to agree that there is somewhere around 15 times more silver in the Earth’s crust than gold. Gold is therefore 15 times rarer. In theory, therefore, the gold-silver ratio should stand at 15"

rarity alone doesn't determine price.

us debt clock shows 20x more gold is being mined than platinum, so using this logic, platinum should be 20x the price of gold?

 

In reply to by Kokulakai

Al Gophilia stacking12321 Sat, 03/17/2018 - 01:59 Permalink

Perhaps this might help: You might consider the criminal shenanigans going on daily at the (((COMEX))), the Commodity EXCHANGE, which controls and allows the buy and sell contracts for precious metals.

The US debt Clock http://www.usdebtclock.org/ shows, in the bottom right hand corner of the spread sheet, the amount of silver they have allowed to be sold compared to the amount readily available for delivery. Naively, one would imagine that if there was a sales docket of 1 contract of 5000 oz of silver, sold for delivery, and money changed hands, then there would be an expectation that the seller had 5000 oz of silver for delivery. An honest exchange on the Exchange. However, the COMEX, under the nose of the regulators at the CFTC, have allowed a group of traders or one dominant trader, the latitude to sell 179.9 contracts for every 1 contract of physical silver that is in their warehouse, available for delivery. Rounded off, there are 180 fraudulent promises of delivery for every 1 ounce in storage or available to be delivered! Imagine what this has done to open discovery of price!

In order for price discovery to balance out the fraud, multiply 180 (fraudlent delivery promises) x the spot price of silver, currently $16.33. That equates to a price of $2939.00.

Now, I probably have the metrics all askew but if I do, I'm anxious to hear it. The gold:silver ratio is playing two commodities against each other. The paper to physical ratio might be something that you may want to consider as an investment tool as well. 

The paper to gold ratio by the way, is posted today at 75.61:1. 

In reply to by stacking12321

Kokulakai stacking12321 Sat, 03/17/2018 - 07:29 Permalink

Who doesn't see opportunity in the last chart?

This has only to do with the price ratio of gold to silver.

When the value of one ounce of gold equals eighty ounces of silver trade gold for silver.

When the ratio drops to 55 or so trade silver for gold.

Those two trades will increase your PM stash, and you are never without the insurance of precious metals.

Rinse and repeat.

For crissakes look at the charts.

In reply to by stacking12321

new game Kokulakai Sat, 03/17/2018 - 08:09 Permalink

try this. real estate. financed at 3.25 ratio of 1:2- 50percent equity.  buy at 300 after improvements. worth 450 after 4 years.

not shiney, not hidden and i am using it right now- a fuking home. beat that with your stack. fuk gold silver and all the hucksters pushing the useless relic. think i'll just roam about my property and look for shiny objects, lol...

or go for a boat ride to go fishing, and not for shiny objects.

another lol.

indians fell for shiny object too.

stupid is as stupid does.

as useful as a terd on a stick.

 

In reply to by Kokulakai

MrSteve afronaut Fri, 03/16/2018 - 22:35 Permalink

When SLW changes it name to WPM and Stillwater sells out to a bigger platinum mining consortium, the mining of silver and related minerals is at rock bottom, so buying the washed out producers is a better leveaged and lower risk timed investment than buying straight metal. Taking profits in gold is taxed in the US as a collectable at 28% so get capital gains rates by buying and selling corporates, mutual funds, CEFs and mining ETFs. Sales proceeds from GLD is taxed at 28%. Disclaimer: make your own tax-based investment decisions, you may live where these rules aren't active.

In reply to by afronaut

Iconoclast421 Fri, 03/16/2018 - 16:09 Permalink

Mining stocks like HL usually break out ahead of silver. Right now they seem to be quite stagnant. I like to focus on HL simply because its calls are so cheap. If silver does break out it is going to drag $5 HL calls from 20 cents to at least a dollar if not 2 or 3. Back in 2010 I made a 10 bagger off of HL calls I bought in august right after jackson hole.

Conax Fri, 03/16/2018 - 16:10 Permalink

I go the author one further, buy 90% silver coins.  (Not junk, just old).

When they are swept from the shelves it will be a real tell for those with the cold feet, maybe they will jump back in and end this farce.

There will be no more pre '65 coins minted, ever. A finite supply to be had at low prices. It's a no brainer. Small denomination, historical relics of hard money.  I remember what LBJ said about us, let's make him writhe a little harder on that spit upon which he is roasting in hell.

Conax Lost in translation Fri, 03/16/2018 - 20:20 Permalink

After signing the act that removed the silver from our coinage (!) he told us we were ignant for trying to profit by saving the silver:

"If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver coin. There will be no profit in holding them out of circulation for the value of their silver content."

Then the stuff went to $50 an oz in 1980.

In reply to by Lost in translation

dark fiber Fri, 03/16/2018 - 17:41 Permalink

Sell the one buy the other go ahead and speculate on the gold silver ratio.  Then make sure you look shocked when you lose your shirt, with the enlightened advice of GoldCore and every other charlatan out there.

Dragon HAwk Fri, 03/16/2018 - 19:18 Permalink

Dollar Cost averaging.

Personally I like a balanced portfolio,  you know Equal parts Gold and Silver.

Third choice which some people find themselves in is constantly trying to lower their Average price Paid.

Jungle Jim Fri, 03/16/2018 - 20:14 Permalink

When started in 2010, everyone was telling me, Oh no, you don't wanna buy gold. Gold's no good. *Silver* is where it's at! Buy silver!" So I bought silver, lots of, and very little gold. When I was forced to start selling my silver -- after it had plunged in value -- I tried to soften the blow a little by rotating some of the money I sold it for into gold, since gold did not yet seem to be dropping like silver. I mean it only lost about half its value, not three-quarters. And maybe I did save a little money that way. I sure didn't gain any though.

Jungle Jim Fri, 03/16/2018 - 20:19 Permalink

"If anybody has any idea of hoarding our silver coins, let me say this. Treasury has a lot of silver on hand, and it can be, and it will be used to keep the price of silver in line with its value in our present silver [sic] coin. There will be no profit in holding them out of circulation for the value of their silver content."

-- LBJ, remarks at the signing of the Coinage Act, July 23, 1965

chennaiguy Fri, 03/16/2018 - 20:48 Permalink

We must all start using cryptos

Bicoin is very powerful. You can transfer value over internet wihout having to know to whom you are sending. But the transfer of value can be tracked using block explorer. The movement of value is transparent but it hides the user. opposite of banking where you dont know where your money is transfered but bank knows who you are. 
Can someone pleaaaaase send some bitcoin. I am trying to create a new record. Being the first person to receive 1000$ worth of bitcoin from zerohedge community :) :) :) :) so far 0.25 dollars raised :)

bitcoin: 1BCiwoAmDXkuopFUre6vttDmzuzATQQpUR

silverer Fri, 03/16/2018 - 21:55 Permalink

Russia is getting ready to mint silver coins to put in circulation. Right now silver is selling for less than it did on Dec. 23, 2017. Tonight you can buy 20 one ounce .999 rounds for $356.57 with free shipping on eBay from Bullion Exchange, a very reliable vendor.

jmack Fri, 03/16/2018 - 22:00 Permalink

I dont know about silver going up, but the medium term outlook for gold is pretty bearish at the moment.  I certainly dont have a crystal ball, but if it opens gap down sunday night, and cant close back above 1313 on monday or tuesday, it is headed for the retest of the 1275 level, which could turn into the full rotation back down to 1250/1245 levels.

InnVestuhrr Agstacker Sat, 03/17/2018 - 07:43 Permalink

I own & operate many income-producing businesses, plus real estate, plus many very diversified income-producing financial assets.

I always have plenty of cash on hand to take advantage of opportunities,  I increase my net worth significantly every year through net earnings after paying all my expenses, inclduing 3 homes, 2 vehicles and 2 fishing boats at each home and I have zero debt - how about you ?

In reply to by Agstacker

grizfish Sun, 03/18/2018 - 19:42 Permalink

The article stated "Since 2003, silver has outperformed stocks, bonds, property and even gold."

FACTS about my Gold and Silver purchase on 2/14/03, which is relative to the assertions in the article:

100 Silver Eagle 1oz. 2003         $653

1 US $50 (1 Tr oz.) Gold Eagle   $368

Silver today  $16.33    16.33/6.53 = 2.50 times greater

Gold today  $1312         1312/368 = 3.57 times greater

Conclusion:  Gold is way up relative to Silver. 

So, what gives here?

fedupwhiteguy Tue, 03/20/2018 - 06:29 Permalink

o/t

50% of women have a man already picked out as plan b if their current relationship fails. (http://www.dailymail.co.uk/femail/article-2769593/HALF-women-fall-partn…)
60% of women admit to having an affair. (http://magazine.foxnews.com/love/cheating-statistics-do-men-cheat-more-…)
69% of wives initiate divorce. (http://www.huffingtonpost.com/entry/women-more-likely-than-men-to-initi…)
90% of wives, wherein the couple are college-educated, initiates divorce. (http://www.yourtango.com/experts/cindy-holbrook/top-10-reasons-why-wome…)
10% of children are false paternity. (http://disinfo.com/2011/02/one-out-of-ten-people-werent-fathered-by-the…)
95% of genetic counselors lie about paternity. (http://thelibertarianrepublic.com/paternity-fraud-is-it-legal-to-lie-ab…)
41% of 1st marriages end in divorce. (https://www.mckinleyirvin.com/Family-Law-Blog/2012/October/32-Shocking-…)
60% of 2nd marriages end in divorce.
73% of 3rd marriages end in divorce.
82.2% of women granted child custody. (http://www.census.gov/prod/2011pubs/p60-240.pdf)
Child support payments can be extended beyond 18 years of age. (http://dadsdivorce.com/articles/child-support-age-of-emancipation-in-yo…)
Alimony payments continue even when women cohabitate with another man. (http://farzadlaw.com/california-divorce/will-my-wife-get-spousal-suppor…)
Palimony payments forced on men who had live-in girlfriends. (https://www.reference.com/government-politics/states-palimony-laws-ee50…)
Prenups are thrown out in favor of fairness. (http://www.dailymail.co.uk/news/article-3525528/Judges-say-ignore-pre-n…)
Divorce devastates men financially (paying for 2 households) & emotionally (loss of access to children). (https://eternalbachelor.wordpress.com/2007/07/23/back-to-basics-divorce…)
Postponing intercourse until 26+ avoids life's pitfalls (cock carousel riders are bad news all around). (https://youtu.be/um3EmS9DKsI?t=581)
Virgin brides divorce less than cock carousel riders. (http://socialpathology.blogspot.com/2010/09/virgin-bride.html)
Women start losing their Sexual Market Value at 20 y.o. (http://www.hookingupsmart.com/2013/10/31/relationshipstrategies/conclus…)
Women gain weight after marriage. (http://www.thehealthsite.com/fitness/5-reasons-why-women-gain-weight-af…)
Frequency of sex drops off after marriage. (https://pairedlife.com/physical-intimacy/Reasons-Why-Sex-Decreases-Afte…)
Woman are just crazy for a man's money. (https://au.answers.yahoo.com/question/index?qid=20130625025358AAcogQy)
Sperm donors can be forced to pay child support. (http://www.nydailynews.com/life-style/health/sperm-donor-sued-child-sup…)