Debt Downgrade: Gold Surging, Why is Silver Lagging?

[BigShiny]

I presume that the "big money" is flowing into gold right now and everyone is ignoring the poor man's gold?

[AU+AG=Bacon]

Gold Fever! I think the rest of the world is catching on!

Bacon.

[Silver Buck]

Silver is a volatile metal that is industry dependent.

If the economy goes into the toilet, the industrial demand goes away.

Gold right now is king.

[cpthnsolo]

Why is Silver Lagging?

Because the DJIA has taken a 10% beating in less than a week. Being an industrial metal really hurts silver on record setting down days. If the market bounces big you'll see silver rocket and gold will lag silver. As for me, I'm simply hoping and praying the metals crash so I can buy more cheap metal :D.

[Apocalypto]

It's simple. People are stupid.

They are so stupid that even gold is still somewhat of a mystery to them. Trying to educate them that silver is also money is even more of a stretch. By the time the average guy on the street has moved whatever he can into gold to protect himself from the impending financial tsunami, silver will have already started creeping up again, and it'll have hit $100 before that guy decides to buy silver.

Silver's day is coming very, very soon and it's going to hit very, very hard.

[Lore]

Silver is still affordable to J6P, and the networks aren't even talking about it. Most still treat Au as a forbidden subject. That in itself continues to speak volumes as to the immaturity of this long term bull market. If Au is a baby, Ag is embryonic. FAs are still pushing paper and preaching "Buy and Hope," and the mass man still listens. I have spent hours talking with select family and friends on this subject, but even they still do squat after all these years and all these early gains.

When Ag starts to climb past the point where J6P is stretched to buy even an ounce or two - but wants to - then we can start talking about things like "intermediate tops" as though they matter. In the meantime, we just build and hold the educated view, set emotion aside and keep doing what makes sense.

[TnAndy]

If you're buying silver, don't look a gift horse in the mouth.

If you're sitting on silver, your day is still coming.

[Aussie]

Silver is currently being trashed while gold is still holding around the $1,760 level . . .

9471

[Strawboss]

Considering what has been happening - silver has performed like a champ - especially compared to its performance in 2008.

[Irons]

Gold is the Mountain, silver is the bunny hill.

[ccjoe]

Gold is the Mountain, silver is the bunny hill.

And your brain is mush.
Just brag brag brag, talk talk talk.
Never admit mistakes like I do and never say a good word about other people.
Are you married irons? How the hell could anyone live with your ****ty attitude.

[GOLD DUCK]

QWAK,"GOLD is MONEY":yes: -- SILVER is just the next best thing! It has always been CURENCY and will be agen! :yes:

Right now there is a WAR going on between GOLD and FIAT:s10: -- every one who understands what IS and IS NOT money knows who wins :hahaha: BUT still because of human nature and the inclination to EXPLOIT for the greatist ADVANTAGE, the majority of people are IGNORENT that there is ANY diference:stupido2: between "MONEY" and the FIAT curency they spend -- usualy foolishly! :stupido2:

The DIE is CAST and both GOLD and SILVER holders/BELIEVERS will be REWARDED:yes::shine: with WELTH and PROSPARITY for standing for HONOST MONEY and actualy backing it up by SAVING and using there FIAT CURENCY to BUY real MONEY and the next best thing SILVER! :2:

Paitence is GOLDEN!:yes:

As ALL FIAT quickly becomes WORTHLESS the false concept that $$$ or any other form of FIAT CURENCY has VALUE will EVAPORATE and expose the GREATER REALITY the BANKERS tried SOoooooooooo hard to HIDE! Only GOLD is realy MONEY! :yes::23_31_2::36_1_11:

the DUCK :2:

[Silver]

And your brain is mush.
Just brag brag brag, talk talk talk.
Never admit mistakes like I do and never say a good word about other people.
Are you married irons? How the hell could anyone live with your ****ty attitude.

:36_11_6: Feeling the sting, huh?

I've been on the silver train since '03 ($4.86), and after several collapses over the years (08' being the worst), I traded my ticket for the gold liner. Still have a substantial silver position, but I am so happy I got off the silver train when I did. Your distress is understandable.

[cpthnsolo]

And your brain is mush.


..................

[Maximus]

Got a couple of those pills to spare. I'm trying to get a few projects finished up and paying work is scarce. I"m holding out for at least 45frns to finance this but the damn year is steadily ticking away. I wouldn't be so frustrated if this was a natural move in the silver market, but most here know that this is an out right, in your face MANIPULATION!!!! That is what pi$$e$ me off.

[<===Foolsgold]

Because....
http://www.goldismoney2.com/attachment.php?attachmentid=9491&d=1312903303

And Silver is a Doorjamb
http://www.goldismoney2.com/attachment.php?attachmentid=8260&d=1307373562

[jogslvr]

If Mr. Dow Jones continues to tank, we may see silver much, much lower before it heads surely over $50 this year, IMHO.

[Irons]

..................

Some silver bugs get so freaked out and emotional when things don't go thier way it's childlike.

Even when the situation is perfectly predictable.

[anywoundedduck]

If you're buying silver, don't look a gift horse in the mouth.

If you're sitting on silver, your day is still coming.

S/G ratio is 45 to 1. S/G historic ratio is 15 to 1. Silver is getting scarce. Gold isn't. Ask yourself, if the economy goes south, are they going to stop building Solar Panels? Electronic Components? Are they going to quit coining silver? As gold gets higher, will they continue to use more and more silver for jewelry?

As a buyer, I am buying silver. How does it go? Buy low, sell high? Smart money is in silver. Not that gold isn't doing great.

Been adding junior explorers by way of Pinetree. Crooks have really been shaking that tree. Good buying opportunity. IMHO

[HistoryStudent]

Because....
http://www.goldismoney2.com/attachment.php?attachmentid=9491&d=1312903303

And Silver is a Doorjamb
http://www.goldismoney2.com/attachment.php?attachmentid=8260&d=1307373562

I smiled when I saw that.

I remember when at $400 each they were giving it away.

Now at around $4,000.00 a bar - give or take - I doubt I would use it for the FRONT door, right?

[<===Foolsgold]

I smiled when I saw that.

I remember when at $400 each they were giving it away.

Now at around $4,000.00 a bar - give or take - I doubt I would use it for the FRONT door, right?

No HS they are in the vault with the monster boxes.

http://i49.photobucket.com/albums/f257/sink45ny/DSC00754.jpg

[Chester-Copperpot]

With gold going in one direction and silver the other, is it a good time to trade gold for silver?

[Deweydog]

If you are a silver "TRUE BELIEVER"....I hear crickets in the distance, and nothing else.

[Irons]

With gold going in one direction and silver the other, is it a good time to trade gold for silver?

Not yet!!! Wait until 60-70:1 if you really want to. Check the GS ratio trading threads in the Gold-Silver Precious Metals catagory

before you do anything!

All you need to know about ratio trading is there, along with endless mindless chatter from ccjoe

you'll have to skip over, but it's worth it.

[InsertUserNameHere]

Silver is a volatile metal that is industry dependent. silver is not industry dependent, it's first of all a financial instrument. When economy goes into the toilet it tends to skyrocket like there is no tomorrow. For example, 1975-1980 or 2008-2014. Industrial demand is a minor influence as history shows.

What do you mean by "If the economy goes into the toilet"? Isn't it where it is?

[anywoundedduck]

Not yet!!! Wait until 60-70:1 if you really want to. Check the GS ratio trading threads in the Gold-Silver Precious Metals catagory

before you do anything!

All you need to know about ratio trading is there, along with endless mindless chatter from ccjoe

you'll have to skip over, but it's worth it.

GS ratio is currently 45:1. Historically, 15:1. It would be 15:1 if it wasn't for the manipulators. Manipulators game has come to an end, and the market has them walking the plank. Silver must return to its historic ratio with gold. Even 10:1 or 5:1 would not be out of the question, given the reduction in silver production in the last decade. It would be prudent to swap some gold out to prepare for silver's upcoming rout, in my humble opinion, which is an entirely different opinion than Irons. Wait for 75:1? It will never happen.
AWD

[Irons]

GS ratio is currently 45:1. Historically, 15:1. It would be 15:1 if it wasn't for the manipulators. Manipulators game has come to an end, and the market has them walking the plank. Silver must return to its historic ratio with gold. Even 10:1 or 5:1 would not be out of the question, given the reduction in silver production in the last decade. It would be prudent to swap some gold out to prepare for silver's upcoming rout, in my humble opinion, which is an entirely different opinion than Irons. Wait for 75:1? It will never happen.
AWD

Historically, 15:1


I love that argument, I really do. When in the last 150 years was gold and silver 15:1?

The only time it held those numbers was when the .Gov set the exchange rate, Period.

When .Gov restrictions were removed Gold surged past silver and except for a couple short term market

flukes never looked back and has never spent any time there.

But if it makes you happy by all means keep thinking that!

[anywoundedduck]

Historically, 15:1


I love that argument, I really do. When in the last 150 years was gold and silver 15:1?

The only time it held those numbers was when the .Gov set the exchange rate, Period.

When .Gov restrictions were removed Gold surged past silver and except for a couple short term market

flukes never looked back and has never spent any time there.

But if it makes you happy by all means keep thinking that!

The last 5000 years the ratio was 15:1. The ratio of actual physical in the earth's crust is 17:1. Those are the facts. It has nothing to do with what I am thinking.

I really think that you should swap some of your gold for silver so you don't miss the upcoming rout. When would that be? Probably when the crooks at the CRIMEX raise the margins on gold to equal the margins on silver. That is when. Probably this weekend. Maybe before. Just rumor though. But keep thinking that it isn't going to happen. So stay in gold. You won't lose a dime if you stay in gold.
AWD

[ttazzman]

Here are some intresting facts associated with the G/S ratio


Is the Old Gold/Silver Ratio of 16 Still Alive Today?

Roland Watson (The New Era Investor) submits: Is there any rhyme or reason to the millennial old relationship between gold and silver? For centuries it was decreed that about sixteen ounces of silver had the purchasing power of one ounce of gold. This was set by way of acknowledgment to the supply and demand fundamentals of the time as well as an attempt to impose some stability on the situation.

It got me thinking in this almost freely floating market of today as to what the various types of gold to silver ratios are saying today. Do they say anything at all or nothing at all in regard to that old monetary ratio?

We have quite a few gold silver relationships we can look at in the world of precious metals. First there is the ratio of the gold to silver price in the fiat currency of choice. According to the last London PM fix, the ratio was 56.1 for the US Dollar and 56.2 for Pounds Sterling and the Euro. Needless to say, this price ratio has jumped about a bit. In fact, it has ranged from 100 to 15 over the last 100 years.

Meanwhile, those companies who fix the gold and silver prices in London transact huge volumes of gold and silver deals under the aegis of the London Bullion Marketing Association [LBMA]. According to their most recent statistics, an average of 164.3 million silver ounces and 25.8 million gold ounces were cleared on a daily basis in June. This gives a ratio of 6.37 to 1.

So to start off with, we have two ratios that are nowhere near the old monetary ratio of 16. But as we delve further, some things begin to get a bit more cohesive.

Looking across the Atlantic to the COMEX warehouses, the ratio of silver to gold inventories as of Monday was 12.24. Not too far from our historic ratio. In fact, it would be closer to 16 if it has not been for the rather rapid draw down in COMEX silver in recent months as metal heads over to the Silver ETF vaults. This ratio has been dropping from a value of 17.8 on the 3rd January and sees no end in sight at this point. Nevertheless, we have an approximation to the old value here.

Meanwhile, the paper contracts as reported by the CFTC Commitment of Traders Report for the 25th of July showed an open interest of 97,539 silver contracts each of 5,000 ounces while the gold open interest was 315,635 contracts each of 100 ounces. Add all that up and you get a futures gold-silver ratio of 15.45. Getting even closer to the old ratio!

We also notice that the popular e-gold website www.goldmoney.com reported its last holdings on the 3rd July 2006 as 176,620 ounces of gold and 2,666,445 ounces of silver. Dividing these two gives us a ratio of 15.1. How pleasantly conformable all these numbers are getting to be! Perhaps the old ratio is alive and well though hidden in the markets of today?

Meanwhile, at the government end of things, the US Mint has been producing gold and silver eagles for some 20 years now. The 2005 mintage numbers show that 444,574 ounces of gold were used in the manufacture of all coins from the 1-ounce down to the 1/10-ounce. For silver eagles, it was 8,891,025 ounces giving a ratio of 19.999. I guess the US Mint was aiming at a ratio of 20 to 1, or was this purely customer driven?

Be that as it may, mintage numbers seems to be a moving target with the US Mint as they revise them. Also, gold eagle demand can shoot ahead of silver eagles as we saw in the run up to Y2K when the ratio was driven down to 3.6. I always thought you got overstated or understated numbers from bureaucratic entities!

We could go on... I was tempted to check the flow of gold and silver auctions on eBay but when I saw that there were several thousand open items ranging from 1 to 500 coins per auction, I hope you understand when I say I backed off from that arithmetical nightmare.

Well, so much for man-made inventories, what about the metal ore deposits still underground? According to the last report from the US Geological Survey, the known gold reserves worldwide were 42,000 metric tons and a reserve base of 90,000 tons.

For silver, the world reserves were 270,000 tons with a reserve base of 570,000 tons. This gives us a gold-silver reserve ratio of 6.43 and a reserve base ratio of 6.33. It seems that nature’s reserves don’t want to play ball with man’s reserves above ground! Why the big difference?

On a related subject, world production of gold in 2005 was 2,450 tons and for silver it was 20,300 tons giving another ratio of 8.29. If the production ratio is higher than the geological reserves ratios, that tells me that silver is being pulled out of the ground faster than gold! As an aside, here is the historical ratio of gold to silver global production since 1900. Note how the ratio started near our monetary ratio before a steady long decline.

World prod ratio

As it turns out, looking back a hundred years or so can be instructive. If we look at the ratio of all gold and silver ever mined, we have 152,000 tons for gold and 1,336,000 tons for silver. This gives a ratio of about 8.8, which is close to the production ratio.

However, in 1900 that ratio was 14.9 and over the last 100 years we get this cumulative production ratio:

cumulative world prod ratio

Historically there was a time when geological output (both cumulative and annual) matched the monetary ratio. Was this an effect of human policy or just geological constraints? Which brings us to the main point; we have noted that in the dealings of men, that there is a tendency for gold and silver numbers to gravitate towards the old monetary ratio of 16. It’s not perfect across the board but it is there.

The two puzzles are why the geological ratio is half the size of the man-made ratios and why is the current price ratio of 56 even more out of whack?

One thing we may surmise is that when gold and silver are “on the move” as in the LBMA and mine production numbers, the ratio is low. However, when the gold and silver are relatively “static” in various repositories or in paper form, the ratio is more aligned with the old monetary ratio. We note that gold and silver held in these places are more likely to have a monetary component about them.

Aside from the possibility of depleting geological reserves, another reason why the geological ratios may be lower than the past may be simply due to the changing demand profile for gold and silver. The coinage components of gold and silver have significantly dropped across the world since World War II while other new forms of demand have come in to fill in the void and more.

This shifting pattern of demand has apparently caused the historic production ratios to drop from the monetary ratio to one that we may call “commodity-oriented”. Granted there is still a component of demand that can be called “monetary” but the shift to industrial applications in the case of silver is obvious. For gold, the investment/monetary component is still more preserved although increased jewelry demand has had the greatest influence on why people buy gold.

But could this in any way explain the large 56 to 1 ratio in the gold and silver prices? Should it make more sense that the geological ratio of 6.33 sets the current silver price at $102 or the 8.8 production ratio to set it at $74? Or why shouldn’t the ratios of close to 15 we have seen in human inventories set the price closer to $43?

The truth of the matter is that the markets set the price. We can talk about price suppression schemes and so on, but if we are seeing a ratio close to 15 to 1 in these inventories and futures contracts, does that suggest that there is in fact a “natural” level in operation?

It is not the amount of gold or silver in motion in the LBMA markets or static in COMEX inventories that matters, it is how much people are prepared to bid up for these metals that matters. In this light, I recall an article I wrote recently on the iridium markets. Iridium mining output is only a few tons a year, yet at $400 an ounce it is 38% cheaper than gold which is mined out of the ground by the thousand of tons a year.

Why isn’t iridium much more expensive than gold? After all, is it not rarer? As we can see, it is not just rarity that matters but usefulness and utility. Gold has many attractions that bid up its price; iridium is only useful for hardening the tips of ballpoint pens.

Likewise, although silver is about six to eight times more abundant than gold; the current perceived utility for silver sets it a price 56 times cheaper than gold. However, when fear of systemic failure in the global markets is heightening, items such as silver gain a new utility and use as a safe haven asset and new demand appears. When that happens, we expect the gold-silver ratio to approach 15 again. Just as it did when a fiat money collapse was last envisaged back in the inflationary era of the 1970s.

Editor's Note: ETFs covering the gold/silver market include GGN, GLD, IAU and SLV.

The issue of how much gold is left to be mined is discussed in the next issue of New Era Investor. Please go to www.newerainvestor.com for more information.

http://seekingalpha.com/article/14922-is-the-old-gold-silver-ratio-of-16-still-alive-today

[Chester-Copperpot]

Its tough to know what exactly to do in these markets. My thinking is, that Silver will start to catch up a little in the coming weeks. My train of thought is that Gold will continue to trade between 1760-1780 and Silver will probably end up at about 41-43.
I'll need to do more reading on the ratio thread, and try and make sense of it.