GSR

[johnbrickner]

I'm not finding a now time oil to gold chart. Suggestions? All I can find are a few at best days old.

[InfleXion]

If the Fed isn't doing QE, I don't expect stocks to hang in there either. We could be on the cusp of some upside in metals due to the fear trade.

certainly possible. but then in the metals rally but not oil, it will really stretch the oil to gold ratio to inprecedented levels.

the oil to gold ratio is discussed less than the GSR, but under the petro dollar system and even before it traded in a very consistent range.

I don't think there's any question oil is undervalued compared to some other assets at the moment, at least compared to what we are used to dealing with, but I still consider gold and silver more undervalued because I believe they have been suppressed for a very long time where as oil has only been suppressed recently.

Maybe if this ratio gets out of wack and stays that way it's a sign that the petro-dollar era is over. If a gold era is beginning, I think you'd have to go back to sometime before the Federal Reserve was around to get a sense of the norm.

However, if we are looking at serious economic collapse, oil may take a long time to recover.

[Lemon Thrower]

i actually think oil is fairly valued in the 30s because there is a glut in storage and excess production capacity with fracking, iran, lesser commercial demand, etc.

so if gold is able to break say $2000 it will require either a higher oil price - not anytime soon - or a new paradigm in the oil to gold ratio.

[Lemon Thrower]

I'm not finding a now time oil to gold chart. Suggestions? All I can find are a few at best days old.

i just use a calculator.

the long term chart is what is most instructive. the ratio rarely has spent much time above 30; it means the oil producers are giving up 30+ barrels for a single ounce of gold.

[IdahoCopper]

This morning the GSR is around 80.5. I am beginning to think the GSR is the real-world tell that the Boyz manipulations are reaching their ultimate stress test.

Recently the GSR got over 83, and the media finally took notice that it was unusually high. Shortly thereafter, it fell below 80.

The GSR seems to be the market forces' lie detector as the Boyz try to juggle the prices of both Au and Ag. Its like the pressure gauge between the Rock and the Hard Place.

[Market Harmony]

History has shown just how much the GSR can fluctuate.

If in 1928 I had to pay someone for a week's wage, I might be able to give them $20. In today's gold terms that is the same as about $1,200. Let's say I paid one person with (1) $20 St. Gaudens and another person with (20) Peace Dollars. At that time, the 2 amounts were equal. However, in today's terms, that same St. Gaudens is worth $1,200 and the Peace Dollars are worth about $240 in melt value. In other words, in 1928 .9675 ozt of gold was equivalent to 15.47 ozt of silver. i.e. a GSR of 1:15.989 For every 1 oz of pure gold was equal to 15.989 oz of pure silver.

Today, 1 oz of pure gold is equal to about 80 oz of pure silver. Since the time that gold and silver fluctuated independently of one another, the ratio has changed dramatically.

So many factors come into play when considering the value of each... And most of those factors change with time. You are charged with determining on your own whether the current market dynamics are pointing to a stretch of the GSR or a reversion to the mean.

I have no opinion. I just arm myself with the facts and figures.

[johnbrickner]

GSR down to about 77. An over 7% decline from the recent high at the end of Feb., almost two months. A trend yet? I wouldn't call it a trend yet as the up price in gold the first Q made it one of the (if not the) best return of conventional investments for that time period (yes, I know TPTB do not want and many of us do not consider PMs an investment) . And a quarter's movement isn't a trend but, they are both in the right direction and we like it.

[Lemon Thrower]

I would be careful.

the bull market in the metals is just starting. its still unclear if it has started.

generally, at the beginning of those bull markets, gold will rise first, followed by silver.

I don't disagree that the GSR is out of whack, but I wouldn't expect it to drop much more until gold has made a new high.

recall that gold had made new highs above $1000 before silver zoomed to $49 and the GSR to 33.

[johnbrickner]

An intraday low below 72 about 12% below it's end of Feb high close to 2 months ago. Silver also recently overtook gold as the year's best return of conventional investments. Does 4 months make a trend yet?

I would love to see it move to it's 1928 ratio levels mentioned by MH above. That would make a helluva trade into gold. The kind of stuff real wealth is made of.

[Lemon Thrower]

the 1928 ratio is roughly where it was when it peaked in the mania in 1980.

more recently it got to the low 30s, 32 or 33.

I'll admit i was wrong on which metal would move first. still, it makes me nervous to see gold not confirming the rally in silver. in stocks, equity analysts look for the transports to confirm a rally in the Dow.

its hard to predict the short term moves, and its a fools' errand. the only way to protect yourself is to just keep stackin.

[Market Harmony]

GSR below 68 is significant only if you look at a chart of the last 3 years. A trend towards a lower GSR may have begun at the end of May. A consistent (5 months) ratio of 65-70 will change the slope of the 250 day moving average line, and might change the direction by the end of the year. Similarly, the 150 week moving average line has proven to be a pretty good direction indicator upon crossover. I don't expect too many wild swings in the ratio as both Gold and Silver are in the news following the Brexit. Perhaps more countries will vote to leave, which will affect the underlying prices, but may not affect the ratio.

[Market Harmony]

GSR below 68 is significant only if you look at a chart of the last 3 years. A trend towards a lower GSR may have begun at the end of May. A consistent (5 months) ratio of 65-70 will change the slope of the 250 day moving average line, and might change the direction by the end of the year. Similarly, the 150 week moving average line has proven to be a pretty good direction indicator upon crossover. I don't expect too many wild swings in the ratio as both Gold and Silver are in the news following the Brexit. Perhaps more countries will vote to leave, which will affect the underlying prices, but may not affect the ratio.

The above message was written 8 months ago and all indications then of movement and GSR has proven to be accurate. In fact Brexit-like movements continue to occur and yes, even the Trump election can be seen as a reflection of the attitudes that are behind Brexit-like movements. People in general are untrusting of governments moving along in the direction that they have been heading. An alternative, really ANY alternative, is being preferred over the status quo. So now a big mark is going to be made by the newly appointed and elected representatives. The power is turned over and change from the status quo will be enacted. Money flow will shift. It will shift big league. It will shift and slosh about like the water in a half filled canoe in the middle of a stormy lake... suddenly shooting up over the edge on one side and then creating great voids on the other. The calmness is gone. Fortunes are about to be made and lost, or lost and made. The regularity of the exchange of goods will cease for many things. The Dollar will act as a wrecking force to some economies and as a building force for others. GSR will continue the downtrend which began with Brexit. Though Gold has shown gains and then losses, it will be Silver that will outperform Gold on a GSR basis.

[68Camaro]

The above message was written 8 months ago and all indications then of movement and GSR has proven to be accurate. ...

The power is turned over and change from the status quo will be enacted. Money flow will shift. It will shift big league. It will shift and slosh about like the water in a half filled canoe in the middle of a stormy lake... suddenly shooting up over the edge on one side and then creating great voids on the other. The calmness is gone. Fortunes are about to be made and lost, or lost and made. The regularity of the exchange of goods will cease for many things. The Dollar will act as a wrecking force to some economies and as a building force for others. GSR will continue the downtrend which began with Brexit. Though Gold has shown gains and then losses, it will be Silver that will outperform Gold on a GSR basis.

Big league analogy MH! I dig the poetic expression of your metaphor.

[InfleXion]

At some point if volatility undermines faith and trust in the dollar enough, it may just be retired. When I think of a fortune, I don't think about digital currency or dirty paper money. I think about gold and silver, real treasure. I definitely feel a GSR reversion in favor of silver is likely, but I wouldn't want to be holding too many dollars while that occurs. Only as many as I plan on spending away. The FR, the ECB, the BOJ, the BOE, all the primary dealers, pretty much all western banks are tied to fate with counter party risk. If silver is to outpace gold it would probably need to be an uptrend. If metals which are competition for fiat currency become expensive and popular again, and if there is also a need to restore trust in the financial system, the dollar/metal ratio could be the real mover. AKA the price. I'll be divesting out of paper as much as possible before that gains too much steam. And that does include some gold for portability right now, but down the line I won't be spending on metals because I expect them to become more expensive. That will be the time to buy other tangibles on the cheap I suspect, since the dollar is the strongest pillar in the house of cards. Not to mention so few people are in a position to transact in cash due to being in debt or not planning ahead, those who can will have an easier time cornering local markets if there is a bank holiday preventing access to funds, but that would only be during a transitional phase.

[Market Harmony]

My previous prediction proved to be wrong. The GSR went from approx. 69:1 on the day of the post (Feb 8, 2017) to approx 80:1 today (Feb 7, 2018). Here's a chart link to the GSR: http://stockcharts.com/h-sc/ui?s=%24GOL ... 4273798204

During the time from the previous post, the US Dollar index went from approx $100 (2/8/17) to $89 today. This may be the reason for the strength in gold relative to silver. Money fleeing the safety of the dollar would go to more stable assets such as gold. The silver market is not large enough to handle the influx of money fleeing the US Dollar. However, this does not mean that silver is out of the game. Should money that is fleeing the dollar begin to find its way into the silver market, then the compounding effect of money chasing money will naturally lead to a melt up of silver price again. The question to answer is then: "Are we in the scenario of the money fleeing the US Dollar and going into precious metals?"

Personally, I don't think we are there quite yet. Liquidity is found in the US stock market and money is chasing money in that arena currently. But, this recent flash crash on Feb 5 may have spooked a few big players. Time will tell, but I think the US stock market will be the place to be in 2018. Once we see cracks forming in the stability over a few months, then I would look to commodities to see the influx of money which is fleeing from stocks... the only potential competitor for the money at that time will be a stable asset; this has historically been the US Dollar or US Bonds.

[68Camaro]

Well someone is buying the USD today to shore it up.

[everything]

The flash crash is the big players, they are still playing, they love it. Millionaires are being made right now as volatility is big opportunity for the risk taker and short players.

Safety of gold is to get rid of whatever currency your stuck with, mostly Asians chase gold because China will repeg their currency in the middle of the night while everyone is sleeping (how nice), and India gets inflationary times which are horrendous, but it's cultural as well, they just had a currency coup last year I think.

Inflation is in the news, we won't feel it yet, but it's a known thing, the feds want it even though they say they don't, they also say wages are the sign of it to come. Great gold price support, as has been the case since last recession when money got cheap. Now all that cheap money .. hmmm. Gold is still our oldest monetary relic, even some of the drug dealers are using gold more. I think the GSR is going 100/1, only because I reason that copper is being pulled out of the ground so fast and in such need, much silver comes along with that. The old 15/1 days are when we were still picking silver off the surface, now it's being sifted out in mass quantities along with the other base metals. Technology changes the dynamic, look what it did to oil prices.

The funny thing about gold, it's plentiful, it's heavy, most of it is lying in the core of the earth, that's why it spews out along the ring of fire via volcanics, I think Russia just discovered another 900 tons of gold that needs to be mined, didn't change the price a bit.

Most any hard core gold bug will say the dollar will be the last to fall, the money is fleeing to gold faster in other currencies. China went from outlawing it to welcoming it, please fill the country up with gold, ATM machines that dispense gold are I'm sure common place by now. That was a nice bone they threw to the people, to simplify and make it easier to acquire, effectively promoting ownership of gold, China is now the driver of gold prices.

[68Camaro]

Many interesting differences between gold and silver. Gold is so dense it is believed to be the product of only the most energetic events - such as collisions between black stars. The gold that was included with the mass making up the original formation of the earth is believed to have sunk into the mostly iron molten core, so only small amounts of gold get burped up by superheated steam along with silica at earthquake fault lines or volcanos. Most of the attainable surface gold is believed to have arrived after the formation of the earths crust, during the period of heavy asteroid bombardment, and most attainable surface gold is believed to have already been mined. While some new deposits no doubt remain to be found it isn't likely they will affect at this point the total available supply more than a decimal point. While 15000 tons are estimated to be contained within total global seawater at a small rate, it has been shown to not be economically feasible to pull that out.

[Recyclersteve]

Traded some palladium (small amount) for silver this past Saturday at the local coin shop. Seeing the GSR above 80 was one thing that prompted me to do it. Also palladium being more expensive than platinum, which almost never happens. Also the fact that the palladium had tripled since I bought it and the silver had only roughly doubled. Also the fact that palladium isn't that far from an all-time high and silver is only about 1/3 of the price of the all-time high. This trade seemed like a no-brainer to me.

[maxwellsilverhammer]

I would be careful.

the bull market in the metals is just starting. its still unclear if it has started.

generally, at the beginning of those bull markets, gold will rise first, followed by silver.

I don't disagree that the GSR is out of whack, but I wouldn't expect it to drop much more until gold has made a new high.

recall that gold had made new highs above $1000 before silver zoomed to $49 and the GSR to 33.

well it seems 2 years later and it still is in very early (if at all) bull starting gate. gsr is still the same all this time. makes you really wonder doesn't it?

[Market Harmony]

Wow, GSR is over 90 presently! I watched a Mike Maloney and Jeff Clark video last night and Mike mentioned that he thinks it can go even higher before turning around and dropping precipitously. I'm not so sure what is going to happen... if you look at a GSR chart from 1970 - today, it looks like there is a rising trend to the ratio. But, if you only consider the peaks of the GSR, then we are at (or very close to) the all-time highs right now. Whether major traders look at the GSR is the key to whether it is significant or not. It's so hard to find a reason for the GSR to change. It is as if each time period is different- initially it was the actual ratio of gold to silver being pulled out of the ground; then it was the supply/demand equilibrium changed with gold being in much higher demand; and then the same thing, but with silver being in such high supply.

What do you think will happen in the next few months? What about the next year? Personally, I think the GSR will need to level off before retracing to the standard deviation. Therefore, whether the GSR continues to go higher or not, I do think that now is a good time to convert gold to silver. Even if it takes a year, or two, or five- you still will be in good shape to reconvert from silver to gold when the GSR begins to dip below the 20 year standard deviation.

Count your stack in ounces, not dollars.

[InfleXion]

Many interesting differences between gold and silver. Gold is so dense it is believed to be the product of only the most energetic events - such as collisions between black stars. The gold that was included with the mass making up the original formation of the earth is believed to have sunk into the mostly iron molten core, so only small amounts of gold get burped up by superheated steam along with silica at earthquake fault lines or volcanos. Most of the attainable surface gold is believed to have arrived after the formation of the earths crust, during the period of heavy asteroid bombardment, and most attainable surface gold is believed to have already been mined. While some new deposits no doubt remain to be found it isn't likely they will affect at this point the total available supply more than a decimal point. While 15000 tons are estimated to be contained within total global seawater at a small rate, it has been shown to not be economically feasible to pull that out.

I really dig this post and how things are laid out. This segways into why I have been bullish on silver for a long time from a supply perspective (of course being bullish on PMs in general is a pre-requisite to buying the silver story). Silver's molecular density being much less than gold means most silver is only at the surface. Although getting the deep gold out is more expensive, getting the deep silver out is even more so.

[InfleXion]

Wow, GSR is over 90 presently! I watched a Mike Maloney and Jeff Clark video last night and Mike mentioned that he thinks it can go even higher before turning around and dropping precipitously. I'm not so sure what is going to happen... if you look at a GSR chart from 1970 - today, it looks like there is a rising trend to the ratio. But, if you only consider the peaks of the GSR, then we are at (or very close to) the all-time highs right now. Whether major traders look at the GSR is the key to whether it is significant or not. It's so hard to find a reason for the GSR to change. It is as if each time period is different- initially it was the actual ratio of gold to silver being pulled out of the ground; then it was the supply/demand equilibrium changed with gold being in much higher demand; and then the same thing, but with silver being in such high supply.

What do you think will happen in the next few months? What about the next year? Personally, I think the GSR will need to level off before retracing to the standard deviation. Therefore, whether the GSR continues to go higher or not, I do think that now is a good time to convert gold to silver. Even if it takes a year, or two, or five- you still will be in good shape to reconvert from silver to gold when the GSR begins to dip below the 20 year standard deviation.

Count your stack in ounces, not dollars.

To me conventional wisdom being that GSR 90 is way above historical norms tells me that a mean reversion is on the way. Could it hit 100 before that, why not? That might be the magic number the collective subconscious known as the market is waiting for. Typically silver takes the elevator down, and gold hosts fast in a downtrend. That implies then for a GSR mean reversion the price is due for an upward bound (silver catching up to gold) otherwise gold would have to outpace silver downward in a downtrend which is less likely.

My layman's charting has long targeted 2020 or 2021 for a new high in silver. I have presumed that to most likely coincide with the next presidential election cycle, or possibly beforehand in order to make Trump the scapegoat for the 50 year ticking money bomb that began in 1971. As I've said before I'll likely never convert gold to silver or vice versa. I will just choose which of those to convert FRNs into based on which one the GSR tells me is undervalued. That is at least for as long as I am earning a wage. If I were retired, that's another story, but the transaction fees would make me wary about doing it very often. I'd rather just barter my coinage as needed, in that case parting with whichever the GSR tells me is overvalued.

[dakota1955]

At 90 to 1 it makes wonder if I should offer to trade some gold for silver.

[IdahoCopper]

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).