Question ----66 to 1 vs 9 to 1?

[neilgin1]

hey gang, sometimes, I LIKE to think i'm "smart"....but I know the TRUTH......coz my knowledge base is VERY NARROW, I need help here.

can the extensive knowledge base here, lend a HS dropout a hand? SERIOUS.

okay, I just read this article on SGT, talking about how the G/S ratio is trading 66 to 1 on the board, BUT they're only pulling silver out the ground at 9 to 1....but I CANT wrap my mind around that.....what does that means?.....I think its OBVIOUS...means the spread is out of whack.....but HOW SO?

does that mean, THEORITICALLY , Gold has to trade 900 dollars to silvers $100?...or does Gold have to trade $180 to silvers $20...OR. does it mean that Gold has to trade 1200 to silvers $120?...here's the article...can you make sense of this?

http://sgtreport.com/2013/06/scottsdale ... ecedented/

[68Camaro]

haven't read the article but it's been well known that silver production has been proportionally lagging gold and the gsr price for some years. But, there was a glut of silver stockpiled for several reasons, which had to be "burned" through. The belief of many including myself is that stock is about gone.

[scyther]

haven't read the article but it's been well known that silver production has been proportionally lagging gold and the gsr price for some years. But, there was a glut of silver stockpiled for several reasons, which had to be "burned" through. The belief of many including myself is that stock is about gone.

Were did it go?

[avidbrandy]

Neil, you're correct. It means that if you divide the price of gold by 9, (1200/9 = 133) the price of silver should be $133 dollars right now.

This of course is only if everything was completely logical, which as you can see, is not the case. So take it with a grain of salt.

[neilgin1]

haven't read the article but it's been well known that silver production has been proportionally lagging gold and the gsr price for some years. But, there was a glut of silver stockpiled for several reasons, which had to be "burned" through. The belief of many including myself is that stock is about gone.

Were did it go?

the semi-conductor slash cyber slash wired world HAS gotten pretty big, doncha think?......one thing i'm real dubious about...in general...is supply and demand stats in the precious metals.

I got "spoiled" trading grains and meats, coz there is VERY LITTLE incentive "cooking" stat's in the those industries.....so by and large, you can cross ref other agricultural stat's.....every nation has a "wheat board"....then when I got into energy, I began to notice 'discrepancies'....for instance, a nations petroleum reserves?....state secret.....as long as I've been an adult?.....the Sa-udi Kingdom has 262 billion barrels reserves, period, end of sentence.....

now...we SAY, we have 8500 tonnes of gold as reserve....the United States....so everybody has THAT NUMBER in their minds...right?....but is it REAL?..

I have to admit, I have NOT done supply/demand/production statistical research on the level in the PM's, that I've done it on the grains.

I should!!...I should know those stats like the back of my hand, BUT...I figure, why?...to me, its an issue of TRUST.

check this out, did you notice, right after we kept hearing about how the Chinese have been buying PHYSICAL gold, hand over fist, month after month....then all of a sudden, the New York Board, PM's goes into a tailspin?...isn't that curious?

I believe there is nothing more than scares US financial policymakers MORE than a Chinese Yuan BACKED by gold...and what breaks my heart even MORE is this; there are MANY Chinese banks with crappy balance sheets, but Chinese financial policymakers have told the LOT of them....."don't even think about us bailing you out, coz it isn't happening".

WOW!!!. Supposed "commies" acting like capitalists, and us, in 2008, bailed them idiot bankers out with TARP.....we were the ones acted like Commies. I remember talking with the whole gang from the old days, who had gone thru the crash of 87 and prospered.....we were going crazy, "No TARP!! No bailouts, let them fail!!!....we'll trade out of it, just like in Oct of 1987!"

But no.....they "bailed the banks out"?....and are WE any better?.....

....and now, they just hold down the price of PM's, and cook BLS stats...and the whole darn mess.......and to add insult to injury the Gold/silver ratio is 66 to 1.....

alright i'm done....enough ofmysavage rantings.

[henrysmedford]

I would say the the GSR has been false because of governmental action. From the start of the USA with setting a GSR to the Feds setting policy . Who know what any thing is worth. Some fun reading.
Coinage Act of 1792-- http://en.wikipedia.org/wiki/Coinage_Act_of_1792
Act defined the proportional value of gold and silver as 15 units of pure silver to 1 unit of pure gold.

Coinage Act of 1873 http://en.wikipedia.org/wiki/Coinage_Act_of_1873
As countries abandoned silver and bimetallic standards in favor of gold, the supply of silver not being used for coinage increased. Coupled with the fact that more silver was being discovered, this caused the world's gold-to-silver price ratio to rise. By 1908, the ratio had reached 40:1.[citation needed]
The U.S. government finally capitulated to the pressure from the western mining states and agreed to the Bland-Allison Act of 1878, which directed the Treasury to purchase silver at a high price. It was replaced in 1890 by the Sherman Silver Purchase Act. The Bland-Allison Act (named for Richard P. Bland, D–Mo., and William Allison, R–Iowa) required the U.S. Treasury to buy between $2 million to $4 million of silver per month at about double the market value, with a ratio of silver to gold at 16:1. President Grover Cleveland forced the repeal of these laws in 1893, which ruined his popularity among many Democrats. After 1893 Western miners and wheat and cotton farmers rallied to the silver cause with the slogan the "Crime of '73"[2], and the movement became known as Free Silver. The silverite movement took control of the Democratic party in 1896 under William Jennings Bryan. The 1896 and 1900 presidential elections focused on silver and gold, but both times, William McKinley, advocate of gold, won the election. This period is best remembered by the cross of gold speech that was made by William Jennings Bryan at the 1896 Democratic National Convention in Chicago on July 6, 1896, in which he expressed his hope that mankind would not be crucified upon a cross of gold.
Gold Reserve Act http://en.wikipedia.org/wiki/Gold_Reserve_Act
The act also changed the nominal price of gold from $20.67 per troy ounce to $35.
Bretton Woods system https://en.wikipedia.org/wiki/Bretton_Woods_system
Nixon Shock https://en.wikipedia.org/wiki/Nixon_shock

William Jennings Bryan: The Cross of Gold Speech 1896

[InfleXion]

I believe GSR at 9:1 is still undervalued for silver. There is far more gold than silver in the marketplace today. Silver mining supply does not meet total demand and as such there is very little refined and available silver. The silver is out there, but not at this price. Some say that the mining ratios are due to silver not being profitable enough to pull out, but since most silver is mined as a byproduct I tend to place more creedence on decreasing ore grades due to silver primarily being deposited near the surface of the Earth's crust, and thus the low hanging fruit has already been extracted.

No joking, based on monetary expansion, I have no doubt (in my mind - perception is reality right?) that fair value gold is over $10,000/oz and fair value silver is over $1,000/oz which is why I don't care about whether I buy at $10 or $40, and why I never sell. Sure I could have booked some profits, sure I could have gotten more ounces for my buck, but parting with metal is a risk I'm not willing to take since nobody knows what the situation will be tomorrow or whether it will be easy to buy back in.