Silver for gold?

[inflationhawk]

The case for holding silver is much the same as it is for gold, as protection against a debased currency and inflation. The price of silver has increased at a far greater pace than gold over the last 12 to 18 months, I am thinking at some point soon it only makes sense to sell silver and use the proceeds to buy gold. Holding silver has been fun the last year...perhaps too much fun!! Maybe it's time to rebalance the precious metals portfolio. I'd like to hear others thoughts on this strategy.

[mortarman]

I think there are a lot of reasons for the gold/silver ratio to fall in the coming months/years. With JPMorgans concentrated short positions in the silver market, and the always valid argument that you don't want to take a cold chisel to your Gold Eagles just to buy a loaf of bread, I'd say there's a lot of sense in hanging on to your smallest denomination silver coins. But then again, I don't have to worry about wealth preservation, since you have to have it to worry about it . I'll be lucky to feed the fam with my sack of dimes...

[aristobolus]

There is a real tension here. On the one hand, if the rapidity of increase in value is considered there is great merit in your thinking. On the other hand, if one believes that the ratio of Gold to Silver is still inflated (currently 33.93 : 1), and will come down even more nearer to 16 : 1; then there may be a ways to go before such a move. Perhaps a bit of re-allocation, but not too much?

[inflationhawk]

I agree about the gold silver ratio being out of whack right now, but it has been for years. This run up in silver has been very quick. I hate the idea of trying to play trader by going back and forth between gold and silver, but it seems like such an opportunity to cash in some silver for gold that hasn't moved as much. Maybe if silver corrected I could reverse the trade to re-enter silver later. It's a fools game to do try to trade like this, but it seems just as foolish to not take profits after such a runup. Long term though there is compelling reasons to hold silver because of the historic gold/silver ratio.

[beauanderos]

I agree about the gold silver ratio being out of whack right now, but it has been for years. This run up in silver has been very quick. I hate the idea of trying to play trader by going back and forth between gold and silver, but it seems like such an opportunity to cash in some silver for gold that hasn't moved as much. Maybe if silver corrected I could reverse the trade to re-enter silver later. It's a fools game to do try to trade like this, but it seems just as foolish to not take profits after such a runup. Long term though there is compelling reasons to hold silver because of the historic gold/silver ratio.

PM me if you want to trade 90% or 999 silver for gold.

[shinnosuke]

I agree about the gold silver ratio being out of whack right now, but it has been for years. This run up in silver has been very quick. I hate the idea of trying to play trader by going back and forth between gold and silver, but it seems like such an opportunity to cash in some silver for gold that hasn't moved as much. Maybe if silver corrected I could reverse the trade to re-enter silver later. It's a fools game to do try to trade like this, but it seems just as foolish to not take profits after such a runup. Long term though there is compelling reasons to hold silver because of the historic gold/silver ratio.

PM me if you want to trade 90% or 999 silver for gold.

This post is a good example of what I like about this forum. We come up with ideas and reach conclusions, sometimes on our own or sometimes with the input of others, that we think are the best course of action. Then, when we are ready to make the move, there is somebody here that has settled the question in their mind with a different conclusion and ready to take the opposite side of the transaction, convinced that they are doing the most beneficial thing for themselves. Can you say WIN-WIN?

[Rodebaugh]

Lets look at the facts:
Less than a year ago an ounce of gold would cost you 70 ounces of silver.
Today 35 ounces of silver will score you that same ounce of gold.

Now let’s look at the opinion:
Might be time to trade a little silver for some gold. I know I have been.

My "core" is for wealth protection. However it has acted recently as a vehicle for wealth creation/appreciation. So how do I lock in the profits? Do I trade my shinnies for FRN? I don't think so. The best option I see to retaining my gains is by trading the now favorable S:G ratio. Not only is my silver worth (in FRN) twice as much as it was a year ago.....it's worth twice as much gold. Just some thoughts.

[beauanderos]

I, on the other hand, think that silver will continue to outperform gold. I started selling gold and replacing it with silver at 54:1 and it's now 34:1 or lower. I am now out of gold ounces, but will hold onto fractionals. It could be a smart move to "take some off of the silver table" right now and move it into gold, but my bet is for continued degradation of the ratio to at least 20:1 this coming year, if not lower. As long as you are in either metal... can you really get hurt? Nah, don't think so. You are so far ahead of the game as compared to fiat idiots that there is no doubt you will someday be wealthy in comparison.

[Rodebaugh]

I, on the other hand, think that silver will continue to outperform gold. I started selling gold and replacing it with silver at 54:1 and it's now 34:1 or lower. I am now out of gold ounces, but will hold onto fractionals. It could be a smart move to "take some off of the silver table" right now and move it into gold, but my bet is for continued degradation of the ratio to at least possibly 20:1 this coming year, if not lower. As long as you are in either metal... can you really get hurt? Nah, don't think so. You are so far ahead of the game as compared to fiat idiots that there is no doubt you will someday be wealthy in comparison.....and Rodebaugh is the coolest guy I know

In 100% agreement with just a small change here and there in wording which I have made

[inflationhawk]

I've reached my conclusion....for now. The input here was very valuable to me, thanks! The trend is firmly in place for the gold/silver ratio to continue lower. It's too hard to pick a bottom and I have to agree that a more long term reasonable expectation is for the gold/silver ratio to go lower still. Maybe 20, but at least a fair bit lower than 34. Who knows, maybe a full reversion to the mean of 16. It's hard to imagine, but there is a good case for it. I will continue to hold silver and gold. I've always been skewed more towards gold on a total portfolio dollar basis, but silver is certainly catching up! I'll hold off longer on selling any silver.

[Market Harmony]

Gold is undervalued in the short term... doesn't matter the ratio of G:S

[frugalcanuck]

An article arguing for a silver to gold ratio of 9 : 1

http://www.zerohedge.com/article/eric-s ... gle-digits

[Country]

GOLD and SILVER take turns in their stages of momentum. Until 2010, GOLD was what was on the move. SILVER languished; frustratingly so. Then, in August 2010 and ever since, SILVER has been on fire. It is GOLD that is languishing now. For the longer term capital preservation, you've got to hold both. However, if your game is capital appreciation, you put your money on who's got the hot hand.

[Rodebaugh]

GOLD and SILVER take turns in their stages of momentum. Until 2010, GOLD was what was on the move. SILVER languished; frustratingly so. Then, in August 2010 and ever since, SILVER has been on fire. It is GOLD that is languishing now. For the longer term capital preservation, you've got to hold both. However, if your game is capital appreciation, you put your money on who's got the hot hand.

You know, I know this. But it is just good to here it again every now and then.

Good post.

[Rodebaugh]

Just a thought: What about the other ratios history?

Silver:platinum currently 54:1
Silver:paladium currently 17:1