I have written and spoken of the Gold to Silver ratio many times in the past. It currently stands at just under 82-1, a little more than a month ago it peaked out just over 92-1 which is close to an all time high (low price for silver vs. gold). For perspective, the natural gold to silver ratio is just under 10-1 as that is the ratio the two metals exist and are mined from the Earth’s crust.
For hundreds of years, the GSR was 16-1 and in fact this ratio was pegged by our founding fathers at just under 16-1. The discount from 10-1 to 16 came about simply due to “weight”. If one carried wealth (metal) with them, silver was more cumbersome. To compensate for the inconvenience of additional weight, silver was discounted to the 16-1 level.
Silver has always been more volatile than gold. During bull markets silver greatly outperforms to the upside, conversely during bear markets silver will drop faster than gold. We are undoubtedly in a metals bull market (fiat FOREX bear market), there are fireworks ahead for all metals, silver will lead the pack!
I write this because we have already assed the inflection point and already see silver vastly outperforming. I have for the last several years suggested metals investors to position more heavily and even entirely in silver based on this ratio. If you are overweight (more than 50%) in gold versus silver, you should consider swapping some (or even all?) of your gold (platinum/palladium) in to silver. The inflection point I speak of does not occur many times in one’s lifetime…NOW is one of those opportunities. The idea is to hold silver now and in the future begin to swap in tranches back in to gold. In this manner for example, you can acquire twice as much gold were the ratio to drop to 40-1. Were the ratio to drop to the historical 16-1 ratio, you would be able to expand your gold position better than 5 fold!
As I have suggested in the past, “junk” silver is in my opinion THE best form of silver ownership for several reasons . The train is leaving the station right now and the ratio is beginning to shrink. Jim has said many times that “silver is gold on steroids” and for very good reason, he has seen the outsized volatility through many cycles. If you do decide to position more heavily in silver, do not get married to it. Owning silver at bear market bottoms should be done with an eye to gaining gold ounces as the bull market matures.
If this is something that makes sense to you or you would like to explore, please contact your precious metals broker or contact me a firstname.lastname@example.org, I will be glad to help you. Hi Ho Silver!