gold for silver

[Medina Joe]

with the ratio as high as it is I might trade some gold for 100 ounces of silver. does anyone else do this?

 

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[Clay Diggins]

Yep - since 1974 been working arbitrage on the ratio. With these ratios it's a good bet to swap even with the loss from the dealers margin.
It will eventually go to 16:1 - when is anyone's guess.

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[Medina Joe]

the dealer's are a pain in the ass to work with some times. I have a good one now. we trade with no paper work and I love it.

 

[delnorter]

Could you guys explain a little more what you are talking about? The concept and procedure. I'm just not familiar.

Thanks,
Mike

 

[Clay Diggins]

An ounce of gold is about $1160 right now.
An ounce of silver is about $15.50 right now.

That's a price ratio of 75:1 gold to silver.

The historical average price ratio of gold to silver is 16:1. The gold/silver price ratio always returns to that 16:1

An ounce of silver at the natural price ratio would be worth $72.50 when gold is at $1160. In other words silver is way under priced right now.

Swapping an ounce of gold for 75 ounces of silver at today's ratio would net you a 467% profit when the market returns to the normal 16:1 ratio. The only concern is how much the metals dealer takes as his cut for the exchange and when the natural price ratio will return. Both the cost of exchange and the time value of money cut into that 467%.

In the metals market, arbitrage is the practice of taking advantage of an unnatural price difference between two or more metals. 75:1 is a huge price difference.

I hope that helps explain delnorter?

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[Bonaro]

Good answer

 

[delnorter]

Yes, thank you. Concise and to the point. I truly learned something interesting and of value.

Mike

 

[goldenmojo]

ClayD Thanks for splainin it to us simple folk. What are the forces that cause silver to be so low now?

 

[worldtalker]

I swap gold(what my Wife doesn't wear)for SILVER...poor mans gold!!

GOD Bless

Chris

 

[worldtalker]

ClayD Thanks for splainin it to us simple folk. What are the forces that cause silver to be so low now?

Plain and simple......EVIL people!!

 

[KevinInColorado]

To learn more about the pressures on the price of silver go see silverinstitute.org You will find content like:
"Silver mine production grew by 3.4 percent to reach 819 Moz (Ed. In 2013). A large portion of the growth is attributable to the primary silver mining sector, which experienced strong growth from the start, along with the ramp-up of operations that entered production in recent years. Primary silver mine production grew 6 percent, and accounted for 29 percent of global silver mine supply. Mexico was the world’s leading silver producer, followed by Peru, China, Australia and Russia. Primary silver mine cash costs stood at US$9.27 an ounce, increasing 1 percent in dollar terms. "

...with production increasing it will be hard to see pricing run up quickly. On the other hand, that same site shows above ground stocks of silver dropped over 20% from 2012 to 2013 so commercial usage is outstripping production...which would push prices up at some point you'd think.

 

[Clay Diggins]

The Silver Institute shows a year by year deficit in silver since 2004 (the earliest year they show figures for). Silver production has not met demand since 1958. Manufacturers used 122 million ounces of silver for solar panels in the last year alone. Most of the silver used will never be recovered unlike gold. The US sold off their 1.9 billion ounce silver strategic metal reserve to help keep the price down. There is no more silver in the US Strategic Reserve stockpiles.

There is a continuous stream of revelations about long term commodities metal market rigging in the last year. Lawsuits and fines are rampant these days as "the fix" is being abandoned by the big players starting with the Rothschild's.

Does this mean the market price of silver will be going up? The fundamentals are all in place and have been since 1964. Silver hit $50 an ounce in 1980 before the government shut down the market. Anything is possible now. When is the big question. I'll leave that answer to each person in the market. I'm not a prophet and history will show that those who pretend to know usually end up on the wrong side of the trade.

I'll leave this subject alone for now. Anything further would amount to politics and opinion and I try to avoid both of those on public forums.

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