Ya' know, we talk a lot about the GSR and it's use determining trades... silver for gold, or gold for silver. If you've tried making one of these trades you find out pretty quickly that your trading GSR is not usually the same as spot GSR. That is, most dealers will want some profit, at least on one side of the deal.
Knowing what my local dealer usually wants on a trade, I've got a trading GSR formula plugged into my bullion spreadsheet using his typical recent offer. For example, as I write this I'm looking at spot GSR of 40.4/1 but a silver-for-gold trading GSR of 41.6/1 getting spot on SAE's and paying a 3% premium on Krugerrands. That's my true exchange rate between those two items with my LCS, though I'd make other adjustments to the formula if trading generic silver or other changes that would alter the terms of the deal.
That trading GSR got me thinking about using GSR's based on actual cost to help determine outright purchases too. Comparing the GSR ratio on retail prices to the spot GSR will give you a quick indication of best buying ops, sort of an over/under when comparing specific silver to gold.
Let's look at an example. Suppose you'd consider only GAE's or SAE's for your upcoming purchase, I'll use APMEX's published pricing and budget for a 1 oz GAE showing at $1497.89 versus SAE's at $40.15 (their 20-99 quantity price). The purchase GSR between these two is 37.3/1. Comparing that to the spot GSR tells me the GAE is the better buy right now, with about 3 oz of silver net loss between spot GSR and the purchasing GSR.
Mind you, this is strictly based on which is the better buy against current spot. It can't take into consideration which might or might not have the best upside potential. So, if you're high on silver and not seriously considering gold then this won't help. But if you're accumulating both, or looking at silver primarily as a potential trade for gold then it's a big help.
It can get very complicated if there are multiple items under consideration. It might be best to make your comparisons and narrow things down before looking at this ratio. I routinely look at spreads to determine current preference for generic vs SAE's vs Maples, etc... and the same in gold items I favor.
If you're looking at something other than 1 oz pieces (on either side) remember to calculate your per oz cost before dividing the silver into the gold to get your ratio number.
This is raw data. I think you still have to take the overall status of the market into consideration. With the spot GSR moving down lately I'd probably still favor silver in the example I gave if the difference in spot to purchase GSR's was down in the -1 oz range instead of -3. In other words, I don't take this to be an absolute, just a tool to help me get a better perspective on the true cost involved in purchasing decisions.