Trade the Gold to Silver Ratio

[valerb]

Buy gold for insurance against fiscal and monetary predations of central bankers, commercial banking and government. Yes – certainly!
Buy silver for insurance, profit and beautiful coins. Yes!

Buy both to own real money that has no counter-party risk.

WHEN?

• The simple answer is buy silver when the gold to silver ratio (G/S) is high and buy gold when the ratio is low. The problem is defining “low” and “high.”
• Silver prices move higher and lower, faster and farther, than gold prices so the ratio moved between 20 and 100 over the past 50 years. The historical ratio is lower, ten to twenty.

PURPOSE?

• Maintain physical ownership of precious metals which have no counter-party risk.
• Enlarge your stacks of silver and gold by trading between gold and silver timed with ratio extremes.
• Sleep well knowing you own real money – gold and silver – not dodgy over-priced stocks at the end of a gigantic credit expansion and stock boom.

REALLY? SHOW ME!

The above graph of the ratio (weekly data) shows an idealized scenario for trading between gold and silver. Buy gold when the ratio is low and silver is relatively expensive. Sell gold when the ratio is high and silver is relatively inexpensive. The red arrows show 13 trades since 1971 that could have drastically increased total ounces in your metal stacks.
Begin in 1971 with $1,000 invested into gold – 23 ounces. Trade back and forth between gold and silver. By late 2018 your $1,000 in gold grew to over 177,000 ounces of silver, worth over $2,000,000 in a perfect trading world.
These theoretical trades were executed with perfect hindsight – about as likely as:

• Everyone is above average.
• The wind is always at your back.
• Politicians are truthful and care about you.
• Central bankers are good-hearted souls motivated to protect the best interests of common people.
• Debt and deficits don’t matter.
• The COMEX is an honest physical exchange.

IN A MORE REAL WORLD:

• The future is unknowable.
• Timing a market is difficult.
• Greed and fear inhibit making good decisions.
• Trend changes are difficult to see in real time.
• All markets are manipulated.
• Every transaction includes a cost.

TRADING IS BENEFICIAL EVEN IN THE REAL WORLD!

• Buy silver when the ratio is high—40s before 1980 bubble and over 60 after the 1980 bubble. Sell silver and buy gold when the ratio is low—below 30 before the bubble and below 50 after the bubble. AND…
• Calculate the five week moving average of the ratio. Trade positions only after the ratio has FALLEN BELOW moving average highs or CROSSED ABOVE moving average lows in the ratio. AND…
• Calculate the 12 period Relative Strength Index (RSI). Trade positions only after the RSI has reached extreme levels—below 25 or above 75—and reversed. AND…
• Assume each trade costs 5 percent in transaction expenses.
• Taxes on income are NOT considered.

This simple trading strategy is less emotional because it’s mechanical. Other more sophisticated systems are possible.

http://silverseek.com/article/trade-...er-ratio-17594

[silverheartbone]

The silver to gold ratio was 88.8 over the weekend.
Now it has plummeted to 88.3 , so the ratio may have peaked.
I had reserved 87 Eagles for trading into gold as the ratio normalizes over the next few years.
Now it seems that I need to buy two more ASEs to represent the ounce of gold that I did not buy at the ratio's 88.8 peak.
(man I hope that's the peak)


To do the same thing with a BITcoin, today I'd need 27 rolls of Eagles.
($7796.22 / $14.44 = 539.9 )
I'm an old fuddy duddy who would prefer the 540 ASEs instead of a single BITcoin!
And that's off topic anyway.

[silverheartbone]

Off topic:
On second thought, to be correct I'd need 27 rolls of the lowest premium generic fine silver rounds available to represent the current BITcoin value,

[silverheartbone]

Sometime over the past 24 hours the SGR went over 90 (90.13), which means that I'll need to add three (not two) ASEs to my stack dedicated for trading into gold.
I hope that is all the silver that I'll need for this project.

A decimal order of magnitude silver price distortion?
I'm betting on it.

[valerb]

Just curious, what difference does it make to you what the ratio is today or next month when it goes to 30 to 1, 20 to 1 and your promised 1 to 1 ratio?

50, 60 or 90 ounces of Silver would still trade for the same 50, 60 or 90 ounces of Gold at a 1 to 1 ratio!!!

If you want to stack more Silver, just stack more Silver, you don't need to treat yourself like a little kid with bizarre justifications, just do it, man up for Christ or Allah's sake!!!

Don't cry over the 60 White Castle burgers you won't be able to buy today with that $54 investment, think how many you could potentially have bought when White Castle is out of business along with every other business when your end of the world as we know it comes along and your ounce of Silver is then worth $3,100 US Dollars that won't buy a pack of gum as no one will except any fiat currency of any kind and you have such a horrendous hankering for a burger of any kind for any price!!!

Think about it, your always looking for another get rich scheme, invest in several hundred White castle burgers, a great storage tank you can build in your basement for next to nothing with your skills and just keep toping off that tank with some fresh liquid nitrogen until all the burger joints in the world are out of business and you become the Silver King Of Burgers at a modest Silver Price!!!

You'll be wealthy beyond your wildest imagination in real terms, not in relationship to worthless paper fiat.

Sometime over the past 24 hours the SGR went over 90 (90.13), which means that I'll need to add three (not two) ASEs to my stack dedicated for trading into gold.
I hope that is all the silver that I'll need for this project.

A decimal order of magnitude silver price distortion?
I'm betting on it.

[silverheartbone]

Within my April 28, 2011 post in the thread trading gold for silver, I linked to a Silver to Gold Ratio chart. I did not know that was the bottom for the decade. Unfortunately the way the page works, today the current ratio chart is shown and not the one that was linked at the time. Unfortunately the forum software mangles the graphics uploads won't work for me, else you'd get a better view of the original graphics that showed the ratio bottoming on Monday April 25, 2011 at 32 to 1.
042711sgr.jpg

Recently the ratio topped out at 93+.



It certainly looks as if that July 5th ratio was the peak value.
My trading from silver to gold stash is starting with 94 American Silver Eagles rather than simply buying 1 American Gold Eagle.
My conversion plan to trade silver for gold follows.

SGR - Trade # - silver remaining
47 - 1 - 47
23 - 2 - 24
11 - 3 - 13
5 - 4 - 8
3 - 5 - 5
3 - 6 - 2
2 - 7 - 0

By trading the ratio, potentially I could end up with 7 times as much gold for my money.

[silverheartbone]

According to Ted Butler's best researched estimate is that JPM has stashed 850 million ounces of silver and 25 million ounces of gold.

850 Mozt Ag ÷ 25 Mozt Au = 34 Ag/Au

JPM Charged by DOJ: The Tip of the Iceberg | Ted Butler


$1500 / 34 ≈ $44