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Old 08-07-2012, 11:33 PM   #1
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At Today's Prices Would You Buy Silver over Gold?

I'm interested in the thinking behind your answer(s) on this one.

If you were already heavily weighted towards silver in your possession, would you still be buying silver (rather than gold) at today's prices with the 57-1 ratio?

Or would you buy gold to have 'diversification' in your portfolio. (I am of course speaking of bullion, not paper).

I am not looking for anyone to give answers according to what they have, but what would they do under the above-mentioned circumstance.

Last edited by Jetstream; 08-07-2012 at 11:34 PM. Reason: clarification of wording in question.
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Old 08-08-2012, 04:55 AM   #2
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every time the price of silver drops i think i should be buying and to transfer some spare wonga into the paper side of my Bullionvault account, so i can act on a whim.

So why dont i ?

Think im burned out on all the speculation about macro moves and no longer care much.
A bit more or less is not really going to make much difference and it might not be there when its really needed anyway.

So its all just a bit of fun and my last big 'throw of the dice'
If it comes good, some further fun can be had with real estate
If not, it will be my pension of an ounce of geld a month.

Its only money after all (-;
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Old 08-08-2012, 06:07 AM   #3
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Gold seems to be in play in "big boys" realm. It has tremendous upside potential to be reintroduced as world reserve currency (some may argue it is already happening, with gold being included as Tier 1 capital). However, as it is not as easy to manipulate as paper money, one might be certain, that TPTB will do everything they can, and some more, to avoid that scenario. So it is only important, if they physically CAN kick the can down the road, and for how long. That is the deciding factor, not anything else, certainly not the market forces.

However, I think that at current prices, gold is out of reach of MANY, many retail investors/Joe Shmo savers. Thus, without that potential push from the main street (when the trust in govt/central planners/financial markets is finally broken - as it will, sooner rather than later), it might be far more difficult for the gold, to break free from the manipulation - especially, that for the scarcity reasons, gold is potentially easier to hoard/manipulate, by central banks.

Silver - the exact opposite. While for obvious reasons, it is way more difficult to use it, when you have significant wealth to deal with (storage etc.), it is much more affordable, if you have, say, $0-$500 to save each month, after all your bills and expenses (I wonder what is the percentage of people, that live in such circumstances, I think it is quite large). So for that reason, I think that silver has a tremendous upside potential, when sheeple run in amok at some stage, trying to preserve their savings. That will be a sight to behold, IMHO - the silver bubble phase. So again, that upside potential is dependent on human decisions/paradigm shift - this time, on critical mass of small people, realizing the seriousness of the shit we are in today. Again, not exactly market forces of supply/demand. Or rather, demand might go through the roof, at some stage.

Also, if any fundamentals still matters, PHYSICAL silver seems to be positioned very favorable in the supply/demand see-saw. Not that it really matters today, but SOME day, it might matter - tremendously.

It also seems, that if for some unseen, miraculous solution, we shall recover without a major shakeup - silver has a great potential to rise, as industrial demand for it will rise as well, when more people start splashing again on the "fashion statements" like iPads etc. Solar panels, another big consumer of industrial silver - all hi-tech, basically.

So in my view, gold & silver to some degree hedge each other, depending on the endgame scenario (small folk vs big boys, economic collapse/economic recovery), and for this reason I personally buy both 50/50 (in dollars terms, at the time of the purchase) - roughly, rounding to the nearest OZs .

However at the moment I tend to think that silver has greater upside potential, long term. But that depends strongly on sheeple waking up. Of course, GSR at the moment is another flashing indicator.

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Old 08-08-2012, 08:20 AM   #4
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I like silver.
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Old 08-08-2012, 08:21 AM   #5
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Originally Posted by Jetstream View Post:
I'm interested in the thinking behind your answer(s) on this one.

If you were already heavily weighted towards silver in your possession, would you still be buying silver (rather than gold) at today's prices with the 57-1 ratio?

Or would you buy gold to have 'diversification' in your portfolio. (I am of course speaking of bullion, not paper).

I am not looking for anyone to give answers according to what they have, but what would they do under the above-mentioned circumstance.
While many people argue for a ratio of 15:1 or 20:1, realistically the average range has been 40:1 to 60:1 over the past 30-40 years; If it gets above 60:1 again I would really jump in.

If you are interested in more than gold and silver, I would look at the crazy ratios on platinum.

It also depends on how much fiat currency you have to spend. If you are only look at gold and silver, my approximate advice would be as follows (in USD):
$1-800 pick up silver
$801-1600 pick up a half ounce of gold and the rest in silver
$1600 - 3000 pick up a full ounce of gold and the rest in silver
$3000+ Pick up mostly gold simply to due to storage issues of that much silver

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Last edited by benjamen; 08-08-2012 at 08:54 AM.
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Old 08-08-2012, 08:30 AM   #6
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wiskey and pain pills are a great investment- assuming you dont consume the inventory!! lol
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Old 08-08-2012, 08:52 AM   #7
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From a risk reward point of view silver seems to be more interesting right now. However, the G-S-R could easily go to 100 for a brief period (e.g. a 2008 style equity market collapse), so you have to be prepared to sit this out. If this were to happen this fall, I wouldn't be surprised if silver plummeted to ~ 20 in a matter of days. Gold would have much more support from large buyers who would be running for the hills.
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Old 08-08-2012, 08:56 AM   #8
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For me, any silver bought below 38 is a bargain. My DCA is still around twenty two dollars, so I am a stacker for a while longer here. I do wish I had some more jack though, but alas, it isn't to be. We're hanging on by our fingernails here, trying to build up some backlog in to next fiscal year. The FedGov is currently in their fourth fiscal quarter money dump, and that's where my bread gets buttered, so I'm doing a lot of face time on the computer these days. We have been getting cut off at the knees by a large vendor seeking to buy their way in to the Space Center, which makes it tough. Building backlog is time consuming and maddening at teh same time. When you are up against deep pockets that are willing to work at or below bare cost to get in on the pie, there's literally nothing you can do.
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Old 08-08-2012, 10:59 AM   #9
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I agree with Mark though my bargain price for Ag is under $30.
I think Ag is the best value as of now however the volitility in Ag will & can be mad'ning.
Percentage gains will probably be more in Ag,but they have the Au Standard for a reason.
Look for PM's in general to drop(watch the Euro/Dollar values),weak hands will be tossed out.
This is a tough ride we're on & it's not gonna get prettier(JMHO).
Any PHYSICAL PM's you hold will be good in the long run.(Again,JMHO)

GOD BLESS OUR TROOPS!!!
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Old 08-08-2012, 11:44 AM   #10
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Thanks guys. I was really looking for some analysis behind the answer and you provided it. It is easy so to get locked into one's own thinking, that you have to have another's view laid out to look at the rationale behind decisions.

rblong2us
- I know what you mean about being burned out by the manipulative activities of government and banks. Not just in PM's but in many other areas of life that affect us all.

bushi
- Interesting concept of why silver price can be more affected than gold's (greater mass of people able to buy), but I wonder which will have more effect on price - powerful banks and governments or the guy in the street who finally wakes up?

Penn
- I like silver too. But at what point does one's holding of silver become too much by ratio to their gold under current (today's) prices? That's my question.

Benjamin
- I agree with you about the ratio. Not sure if we will see 15:1 for awhile. However today's ratio is a manipulated ratio for a reason. If and when manipulation is curtailed (it will never totally stop - mankind being of the nature he is), it should drop to close to that.
You choose gold for large purchases mainly due to storage issues. If storage was not an issue, would you still choose gold, or would you recommend to silver? In other words, is storage the determining factor in your choice?

swissaustrian
- I agree. Gold for security - silver for reward. In these days, which is more important?

ancona
- ain't that the truth! The old tension between holding onto some needed cash and putting it into investments (PMs or otherwise). Sorry to hear about the unfair competition. With an average of $22.00 you bought in at a good time.

BigJim
- at a $30.00 limit for a bargain, then we are basically sitting pretty close to it now. What number would you put on gold as your 'bargain price'?

Thanks to all! This is a good discussion. I am always more interested in WHY someone does what they do, than just WHAT they do. Motive is a powerful thing. If someone buys or invests in something because "everyone else is doing it" I probably am ignoring it. If they are doing so because of a well thought out rationale, then I want to take a serious look at the matter.
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Old 08-08-2012, 12:01 PM   #11
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Jetstream,
My pile has metals bought at 12 all the way up to about 37, so when I look at it, I try not to see the dollar amount of any individual purchase, although every purchase I make lifts my DCA higher, so it can be hard to buy at 28 - 30. I think in the intermediate term, say the next three years or so, the world turmoil is going to worsen and make safe havens more and more attractive to investors, with silver and tgold leading the pack. As folks watch sovereign debt become less and less safe, and negative returns, PM's quickly become the go to place.
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Old 08-08-2012, 12:39 PM   #12
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Originally Posted by Jetstream View Post:
Thanks guys. I was really looking for some analysis behind the answer and you provided it. It is easy so to get locked into one's own thinking, that you have to have another's view laid out to look at the rationale behind decisions.

rblong2us
- I know what you mean about being burned out by the manipulative activities of government and banks. Not just in PM's but in many other areas of life that affect us all.

bushi
- Interesting concept of why silver price can be more affected than gold's (greater mass of people able to buy), but I wonder which will have more effect on price - powerful banks and governments or the guy in the street who finally wakes up?

Penn
- I like silver too. But at what point does one's holding of silver become too much by ratio to their gold under current (today's) prices? That's my question.

Benjamin
- I agree with you about the ratio. Not sure if we will see 15:1 for awhile. However today's ratio is a manipulated ratio for a reason. If and when manipulation is curtailed (it will never totally stop - mankind being of the nature he is), it should drop to close to that.
You choose gold for large purchases mainly due to storage issues. If storage was not an issue, would you still choose gold, or would you recommend to silver? In other words, is storage the determining factor in your choice?

swissaustrian
- I agree. Gold for security - silver for reward. In these days, which is more important?

ancona
- ain't that the truth! The old tension between holding onto some needed cash and putting it into investments (PMs or otherwise). Sorry to hear about the unfair competition. With an average of $22.00 you bought in at a good time.

BigJim
- at a $30.00 limit for a bargain, then we are basically sitting pretty close to it now. What number would you put on gold as your 'bargain price'?

Thanks to all! This is a good discussion. I am always more interested in WHY someone does what they do, than just WHAT they do. Motive is a powerful thing. If someone buys or invests in something because "everyone else is doing it" I probably am ignoring it. If they are doing so because of a well thought out rationale, then I want to take a serious look at the matter.
Jetstream,
Like Mark I've bought up & down since Ag was $4 oz(late 1990's)& I cost average.
$30 is not a limit but where i feel comfortable at this time.
Au bargain price IMHO would be under $1550 w/premiums.i still think Au is cheap now.
As it's been said before,the purchase price will matter little in the future,it's how many ounces you own.(Again,JMHO)

GOD BLESS & BRING OUR TROOPS HOME!!!
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Old 08-08-2012, 01:17 PM   #13
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Originally Posted by Jetstream View Post:
Benjamin
- I agree with you about the ratio. Not sure if we will see 15:1 for awhile. However today's ratio is a manipulated ratio for a reason. If and when manipulation is curtailed (it will never totally stop - mankind being of the nature he is), it should drop to close to that.
You choose gold for large purchases mainly due to storage issues. If storage was not an issue, would you still choose gold, or would you recommend to silver? In other words, is storage the determining factor in your choice?
What really matters, is why you are making your purchase and what is important to you personally.

Factors to consider:
1) Storage
2) Liquidity
3) Current price relative to some benchmark (nominal value, ratios, ect)
4) Purpose of purchase

Gold:
Low storage cost as a percentage of value
Highest liquidity
Slightly high price
Long term store of value

Silver:
Highest cost of storage as a percentage of value
Second highest liquidity
Low price
90-120 days worth of expenses, speculation on upward swing in price

Platinum:
Low storage cost as a percentage of value
Third highest liquidity
Very low price
Concentration of wealth, speculation on strong upward swing in price

Palladium
Medium storage cost as a percentage of value
Lowest liquidity
Slightly low price
Diversification, volatility speculation?
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Old 08-08-2012, 02:35 PM   #14
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One other thing to consider, regarding historical GSR ratios, and when it turned up from historical ~15, is roughly when silver got de-monetized (gold was lingering little longer as a currency). Just remember, that gold is STILL considered money among banks at highest level (for what I know, Bank of International Settlements deals in gold), and not just as a "tradition", as some would like us to believe

Thus, we might see ratios returning down, to more historical (when both gold & silver were considered money) levels, IF the small folk starts de-facto use it as money again (or at least as a store of value), despite official stance in this regard. If people disregard the official propaganda tubes, then we would be back to good old supply/demand rules, and I think that is where the historical ratio stabilized at.

Also, it is possible (if far-fetched), that some desperate country might decide they simply have nothing more to lose, and get a plunge into PM-standard - possibly silver standard, not necessarily gold standard - again, for affordability reasons. I think traditionally China was always on silver standard (before getting "modernized", and now being de-facto on Federal Reserve standard, Yuan being pegged to US $), there are some (not so) odd shots ideas floating around, of possible financial recovery scenarios for countries like Greece, Mexico - if they adopted silver as their currency base, even fractional (not mainstream ideas, of course, but you know, once something starts rooting...)

So I think it is where silver might start catchin up on gold - if it gets monetized again - either officially, or de-facto, by common folks.
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Old 08-08-2012, 03:14 PM   #15
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Silver is the better buy. It is simple. But even gold is decent. Do NOT CHURN.

Stack what you can forget that you own.
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Old 08-09-2012, 08:13 PM   #16
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http://seekingalpha.com/article/6586...le-or-are-they

Quote :
Hoard when 63+ oz. silver buys 1 oz. gold
Accumulate when 57 - 62 oz. silver buys 1 oz. gold
Hold when 34 - 56 oz. silver buys 1 oz. gold
Swap when 20 - 33 oz. silver buys 1 oz. gold
Liquidate when 19 or less oz. silver buys 1 oz. gold
GSr is ~57.5 now, so I'd go either way. As a new investor/stacker/whatever you want to call me, the average paid for gold and silver are $1639.33 and $29.16 respectively. The recent price "jump" has made me reluctant to buy. Hoping that prices will drop a bit before Goldmart's Grand Re-Opening sale ends.
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Old 08-11-2012, 02:31 AM   #17
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Originally Posted by superhero View Post:
http://seekingalpha.com/article/6586...le-or-are-they



GSr is ~57.5 now, so I'd go either way. As a new investor/stacker/whatever you want to call me, the average paid for gold and silver are $1639.33 and $29.16 respectively. The recent price "jump" has made me reluctant to buy. Hoping that prices will drop a bit before Goldmart's Grand Re-Opening sale ends.
Superhero - two things:
1. Don't try to "time the bottom".
2. I think we are kind of bumping along the bottom right now.

Also, very few buyers think in terms of 'cost-averaging' forwards. That is, what will your average price be if you start buying now and looking into the future. If you believe that the price of the commodity you wish to invest in will rise, the best time to buy is now (sooner) than later.
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