GSR

[Cu Penny Hoarder]

At 91:1, silver is CHEAP AS F*CK! Just buy it and put it away.
https://stockcharts.com/h-sc/ui?s=%24GOLD%3A%24SILVER&p=D&yr=1&mn=0&dy=0&id=p87551191335

Veteran forum members here should already own at least 1000oz of Ag, minimum. I'm currently at 15x that and I wish I had more.

Interesting how PMs keep bumping up against $1350 and $15. Will 2019 be the year it finally breaks out and takes off? Let me check my 8 ball!

[Thogey]

Question.
Why does a high GSR, mean that silver is cheap.

[Cu Penny Hoarder]

Question.
Why does a high GSR, mean that silver is cheap.

It doesn't mean that, it means that 1 ounce of gold buys 90 ounces of silver.

Silver is EXTREMELY UNDERVALUED when compared to the real inflation rates and amount of fiat/debt dollars that have been printed and are floating around out there. Cheapest hard asset on the planet!

Can't wait to revisit these posts when the markets blow up and silver is north of $50oz again. The naysayers/people who gave up on silver will be wanting to suicide themselves.

[Changechecker]

90:1 makes me also wonder if a HELOC on the home equity to buy silver is a reasonable gambling debt.

Many HELOCs start with 6 months a 2.99%, then move up to 5.25 or 5.50% Many have interest only payments for the first 10 years.

$30,000 borrowed to control silver bought at $15.35 is 1,954 oz.

Three percent on $30,000 is $450 for the first 6 months, so $75 per month. After that, at 5.25% the monthly interest payment is $131.25/mo. So in two years, the cost of the gamble is $2,812.50, or 9.375% of the $30,000.

Considering the buy/sell spread, If silver goes up 15-18% in two years, its a break-even. So by Jun of 2021, it would need to be $17.65 to $18.11 per oz.

If it reaches a "new high" in 2020 or 2021, that would be what? $60-$65 per oz? Roughly a 4x increase, so sell the bullion and get ~$120,000. Sell 1/4 of the silver and pay off the HELOC, and you keep 1,465 oz of bullion, or sell more to resolve any other overhanging "problems" you may have.

Yeah, there is risk. But is seems like it may be reasonable and manageable. When you convert USD to Ag, its like any other currency exchange. You still have the value in your hand (minus fees).

Had the chance to do this in 2003 when silver was cheap. Heloc available and I dropped the ball. I regret that. I say go for it with what ever amount you are comfortable with. Your upside is too good. You can always sell some if you get behind with a payment.

[Cu Penny Hoarder]

90:1 makes me also wonder if a HELOC on the home equity to buy silver is a reasonable gambling debt.

Many HELOCs start with 6 months a 2.99%, then move up to 5.25 or 5.50% Many have interest only payments for the first 10 years.

$30,000 borrowed to control silver bought at $15.35 is 1,954 oz.

Three percent on $30,000 is $450 for the first 6 months, so $75 per month. After that, at 5.25% the monthly interest payment is $131.25/mo. So in two years, the cost of the gamble is $2,812.50, or 9.375% of the $30,000.

Considering the buy/sell spread, If silver goes up 15-18% in two years, its a break-even. So by Jun of 2021, it would need to be $17.65 to $18.11 per oz.

If it reaches a "new high" in 2020 or 2021, that would be what? $60-$65 per oz? Roughly a 4x increase, so sell the bullion and get ~$120,000. Sell 1/4 of the silver and pay off the HELOC, and you keep 1,465 oz of bullion, or sell more to resolve any other overhanging "problems" you may have.

Yeah, there is risk. But is seems like it may be reasonable and manageable. When you convert USD to Ag, its like any other currency exchange. You still have the value in your hand (minus fees).

Had the chance to do this in 2003 when silver was cheap. Heloc available and I dropped the ball. I regret that. I say go for it with what ever amount you are comfortable with. Your upside is too good. You can always sell some if you get behind with a payment.

Upside is good, but it's still very risky. TPTB could keep silver down for much longer than he/you can stay solvent.

[Thogey]

At 91:1, silver is CHEAP AS F*CK! Just buy it and put it away.

What does his mean then? Is there something about the ratio that is unbreakable? Could it mean that gold is too expensive? Or are you suggesting it is just a good time to sell gold an use your proceeds to buy silver?

MH's chart indicates to me a random relationship. How does the demand for gold affect the demand for silver.

BTW F*ck is not cheap

[Thogey]

I remember everyone screaming bloody murder about JFFs analysis.

HE was right. Silver bugs were spectacularly wrong. Silver demand is what it is. The price is what it is worth.

I like silver, but it is just metal. Most of humanity does not find it that important.

[Cu Penny Hoarder]

At 91:1, silver is CHEAP AS F*CK! Just buy it and put it away.

What does his mean then? Is there something about the ratio that is unbreakable? Could it mean that gold is too expensive? Or are you suggesting it is just a good time to sell gold an use your proceeds to buy silver?

MH's chart indicates to me a random relationship. How does the demand for gold affect the demand for silver.

BTW F*ck is not cheap

It means that COMPARED TO GOLD, SILVER IS CHEEEEEEEEEEEEEEEEEP as F******************CK!

If you've given up on silver... oh well.

[Cu Penny Hoarder]

I remember everyone screaming bloody murder about JFFs analysis.

HE was right. Silver bugs were spectacularly wrong. Silver demand is what it is. The price is what it is worth.

I like silver, but it is just metal. Most of humanity does not find it that important.

So you've turned into a silver hating troll... we get it.

[Thogey]

Who's we?

I like silver. I'm just not mortgaging the house to by it based on GSR.

It is obviously a loose ratio.

[68Camaro]

I remember everyone screaming bloody murder about JFFs analysis.

HE was right. Silver bugs were spectacularly wrong. Silver demand is what it is. The price is what it is worth.

...

You're oversimplifying the views of that thread. I don't want to re-hash the whole JFF thing, but there was quite a diversity of opinion on all sides. Speaking for myself, while I allowed as how his trading analysis technique might be able to react to sort-term trends, he was presenting results that required the details of his analysis methods to use (which he wouldn't provide), and to use them effectively you needed to be able to react to changes in result immediately. So for those that were essentially day-trading, his view of silver was interesting but not useful and actually (in my view) dangerous to anyone not privy to his process and data that feeds it - leading to false high expectations. He would always be able to claim plausible deniability when something went wrong with someone else's trade. What I objected to was his coyness about a process something that couldn't be independently verified, and his implicit encouragement of others to follow the Pied Piper with no top cover.

As to some specific conclusion, silver went lower from that point. Did he say it would do that? - maybe I blanked it out I frankly don't remember him quoting a specific long-term price except that - yes - he did say that the value of it is what people will pay for it. (Duh) In the short term it'll always go lower or higher, and there is more or less a 50% change of being correct with either view, and only if you have some technical trading algo that uncovers patterns can you really beat that. In the long-term (where the time axis isn't days, weeks, or months, but years or 10s of years), silver is always going to go higher, unless civilization itself goes away. And you can't look to the blips high or blips low and use those numbers to make any long-term plans. It's the long-term trend-line that matters.

One interesting thing - silver has hit a floor - at least an intermediate length floor. That doesn't mean it can never ever go lower, but for the civilization that we have now, I would be willing to make a modest bet that we will not see a multi-month (3 months min) close at 14 or lower, because quite frankly the cost of production combined with basic demand insists that the price be at least that high for any reasonable period of time. (This doesn't mean it can't flash lower due to overreaction.)

[Thogey]

silver is always going to go higher, unless civilization itself goes away.

Why? No one uses it for money anymore. Everyone uses debt. Silver as a trade medium will not return. It is not going to happen.

JFF said silver would be crushed and it would a black swan, ruining our forum. Did that happen?

Why does the cost of production matter? The price of dog $hit is below the cost of production, so do we buy up dog $hit?

I don't hate silver, I have plenty. But I keep reading these reasons why silver is going to rise, all expecting history to return. History my not return.

I remember when, according to smart people, silver would not drop below 25.

[68Camaro]

Silver not going back below 25 was a rah rah cheer unsupported by data. It seemed we had passed a one way price "diode" but we hadn't.

I don't see that the forum has been ruined. Though the enthusiasm for silver of course has been, for the moment. Interestingly I found the forum out of desire to find a physical commodity that would maintain value in a crisis (prompted by the aftermath of the 2008 crisis) and I knew about the copper cent. I was already dabbling in silver but was behind many that had started well before me.

Silver has intrinsic worth with jewelry and industrial demand (on many levels) and it is being expended rather than stored like gold. dog $#!+ has no value.

Silver may or may not go "to the moon" but electronic / fiat currencies always go to zero and despite fluctuations over the centuries there have been many written comparisons about gold and silver maintaining their value relative to cost of goods. Perhaps gold better than silver, for consistency, (or this gsr ratio discussion wouldn't exist) but both better than paper or electrons.

[coppernickel]

Idea 1, My observations of the markets show gold, oil, and Dow Jones Industrial are severely upwardly skewed. Silver, copper, platinum, Nikkei, and Shanghai appear on normal trajectories. These normal markets are moving slowly.

It shows me there are some market manipulating forces trying to move all markets but they have not fully succeeded.

Idea 2, Not talking price, but availability, the amount of silver dispersed from industrial or art usage may show gold to silver ratio of closer to 1:1.

Idea 3, For much of history, think China and India up to millennia ago and Rome until the start of the last millennium the ratio for religious of availability reasons was between 1:4 and 1:6.

My short answer is silver is a better buying option today than gold.

[Thogey]

This is good information. I need cash. So I'll sell some gold instead of silver. I might need to sell some silver so I hope you optimists are right. Hopefully some RCers want to be on the other side.

[InfleXion]

At 91:1, silver is CHEAP AS F*CK! Just buy it and put it away.

What does his mean then? Is there something about the ratio that is unbreakable? Could it mean that gold is too expensive? Or are you suggesting it is just a good time to sell gold an use your proceeds to buy silver?

MH's chart indicates to me a random relationship. How does the demand for gold affect the demand for silver.

BTW F*ck is not cheap

No ratio is unbreakable, and although past performance is no guarantee of future results, we can look at the historical norm of GSR at 20:1 as one indicator that the GSR is overvalued in favor of gold or undervalued for silver. Another indicator, and the one I am more apt to pay attention to, are the mining output numbers, as in the amount of supply coming to market. I haven't checked on those in a few years, but it used to be 7:1, so I think 10:1 is a reasonable enough ballpark on that, and it makes the same case as the historical ratio.

There is also the mantra that silver follows gold as a monetary metal first, and is an industrial metal second. If you believe that, then a high GSR also bodes well for silver if and only if we are in a bull market, and the charts over the last 20 years seem pretty clear to me that the bull market did not end in 2011. Rather it just blew its top and normalized back to the initial trend.

Of course the only thing that actually matters is how much currency is flowing into either market, since price is the arbiter of supply and demand, and all other factors will be overruled by that. That's where JFF had things right. All the logic in the world won't supercede the market makers, and inside knowledge, as much as we may not like it, will rule the day for as long as currency can be created ex nihilo.

[Market Harmony]

Looks to me like PMs are ready to move higher with a new cycle starting with this most recent trendline break

[Recyclersteve]

I don't want to re-hash the whole JFF thing, but there was quite a diversity of opinion on all sides.

Who or what is JFF?

[Thogey]

I thought he was a smart guy who liked to share what he knew, brag. He would put up all these charts and explain how he was jobbing the silver market.

His posts were not emotionally involved IMO.

Neil would flame the hell out of him. It was all a bunch of commodity trading gangster stuff I do not understand.

Others disagreed. He was banned.

You would probably love to read those posts.

[NotABigDeal]

JFF was/is a jackass. I'm sure some of his spewing is still on the site, although he isn't....

Deal

[Recyclersteve]

So was it Jon Fly Fish?

[NotABigDeal]

Yes.

Deal

[Treetop]

The price of dog $hit is below the cost of production, so do we buy up dog $hit?

If you can get it for free (the price of gas and work) I personally think you should go for any manure even one that needs extra safety to compost properly like a dogs lol. We easily might never see such days, but could be fertile soil for a supplemental garden (or worse) could be needed and IF such a day happens youll have a pile of value in the back yard.

Anyway, my issue with JFF wasnt what he said about markets or silver, but he insisted to me once that having many multiples more paper silvr then physical meant nothing. I find this silly. If you could only buy claim to real silver and even half the money in paper silver was into real stuff the price would be higher. Should the day comes this matters then of course only real silver you have will matter. I saw him twist other peoples points as well.

STACK THE POO lol

[Treetop]

To add a little to what I said above, he also acted like he didnt even know what I meant when everyone else who was responding and referenced my point understood and its a pretty simple point. Disingenuous at best.

[InfleXion]

Let us not forget what our currency is. It is not a dollar by legal definition. It is debt. Not only that, but debt that can only be repaid in debt. Trading debt for silver is a good deal at any price, if you ask me, assuming you have enough spare debt notes not to have to convert back into debt notes before you want to.

Money is metals (durable, divisible, portable, fungible, and a store of wealth). FRNs are a broken promise to redeem paper for gold or silver. FRNs only came into existence as a proxy for gold and silver. When the yard is measuring the yard stick, how reliable can it be? Converting debt back into money, being your own central bank, is the only way to protect yourself from counter party risk. When those risk chains start to blow up, because 100+ people all think they own the same single asset and try to call it in, only tangible assets will be immune to the 99% haircut.

Since the price of gold was initially a ratio of dollars in existence divided by gold oz. in Ft. Knox, that is the bar I use to gauge what fair value should be. It's hard to figure that out these days, but I think $12,000/oz is reasonable. With the GSR mining output being 1:7 (7 times more silver than gold) and the historical GSR being 20:1, I'd say 10:1 is a reasonable ratio in absence of the futures market should a physical shortage occur, and parity would not even surprise me. $20/oz to get something I value at $1,200/oz that could very well go vastly higher if demand leads to a shortage, where industrial demand is in excess of 10,000 uses with no cheaper alternative, where mines are not even geared for silver, have been shutting down in recent years, and now face a lengthy restart process to get going again, I am just as happy to buy now as I was at $40/oz. It's not that silver is cheap. It's that currency is worthless, yet you can still get something worthwhile with it as long as taxpayers are willing to use it instead of real money and while military might enforces it. The question for me has always simply been, how many ounces? Not selling, just waiting to barter or for a new currency. If I don't live long enough to benefit, somebody down the line will. If it's about getting rich, getting something for nothing, that's a weak handed mentality asking to be fleeced by market turbulence. For me it's about protecting what I've earned.