Gold to silver ratio.

[lmwstamps]

To answer the OP's question, I think there may be several reasons that the gold/silver trade doesn't occur very often.  The primary reason is probably that both gold and silver are somewhat out of favor right now, with silver being a little more out of favor.  At the end of the day, a trade occurs between individuals who each have something the other wants or can use.  With both metals being out of favor right now, most people have a tendency to stick with what they have.  With that said, back in the summer I did trade 19 ASE's for a 1/4 Oz of gold.  This was with my LCS.  I didn't need all of those 2015 ASE's but the LCS had a market for them and the LCS didn't have a market for the coin that I traded for, but I did.  The trade was basically spot for spot but only occurred because we each had something we didn't need but could trade for something we each could use.  I have silver that I intend to rotate into gold, but I don't want to do it at these prices.  If the ratio closes, that will most probably signify that silver has increased in price at a higher percentage relative to gold.  When this happens, it may begin to bring more silver buyers into the market making silver more desirable than gold and creating opportunities for trade.  If silver begins to spike along with gold I think that what happened in 2011 will happen again.  Dealers will not be able to keep enough silver on hand to satisfy the demand and they will willingly trade gold for silver.  

[vand]

There are 2 levels to playing the GSR:

1. Do you prefer buying silver to gold currently because of its relative cheapness?

2. For those who hold gold, are you actually willing to swap some of your gold to buy silver?

 

At the moment only the first point is in play for me. I'm happy buying only silver at these prices, but I would have to see a GSR > 88 to consider selling my physical gold to buy silver. The spreads make this expensive, so it is not something that I want to do unless I see a 3 standard deviation extreme. We are not there yet.

Also there are other ways to play the ratios.. like switching to platinum, which is even more underpriced, and the spread is much lower than on silver.

 

[Pete]

Since I became a stacker I have seen the price of a 1 oz gold coin fluctuate between about £1,000 and £900 i.e 10% approx.

During the same period a 1oz silver Britannia or Perth Mint coin has fluctuated between £30 and £15 i.e. 50% approx.

Silver would appear to have considerably more upside potential due to the high G/S ratio if you believe gold is not over valued right now.

I would also keep an eye on Platinum which used to be more valuable than gold but you need to be looking for a supplier that doesn’t add 20% VAT.

[HawkHybrid]

7 hours ago, RoughDog said:

 Are you refering to the image on the coin or are you referring to low gold premium for it's weight

Obviously there is a gold and silver britannia but no silver sovereign.

 

I was referring to it's trading properties. the close to spot buy

back price from almost any decent local dealer means that

gold can theoretically be held(at an inconvenience) as savings.

flexibility brings manoeuvrebility. if I needed to quickly fund a

project I can probably due so provided I have sufficient

sovereigns to sell. this is not so easy with silver as silver is

the long term. you should only put what money you can afford

to tie up for decades into silver. as you would not use up all of

your cash to put into savings(sovereigns) similarly it's not

smart to allocate all your savings to long term commitments.

you can allocate more savings to long term commitments if it

was the natural flow of a revised strategy. doing so because of

the price drops is usually not a good idea. with an ever changing

world it's less likely that people are putting more savings to long

term commitments. buying silver is like buying anything else, buy

what's suitable for your needs instead of buying what's cheap.

 

HH

[Lowlow]

2 hours ago, Pete said:

I would also keep an eye on Platinum which used to be more valuable than gold but you need to be looking for a supplier that doesn’t add 20% VAT.

Platinum is really strange right now, it's inexpensive (relatively), rare, even more rare than gold or silver, has a pile of industrial uses, and rumor has it that people in china had been buying it up like crazy.

[RoughDog]

I understand what you are saying HawkHybrid. 

Gold Britannia and Krugerrand can be sold to dealer too, at slightly better terms than a sovereign, only at ounce weights.  Yes?

If I understand correct fractionals can only be sold like this to a buyer not a dealer?  Dealer will pay spot but premiums more or less maintained selling on forum?

[Panicbuying]

Has anybody considered going short Gold ETF and long Silver ETF (for the same amount), which should be beneficial if GSR (ever) goes back to more normal levels?

[Lowlow]

23 minutes ago, Panicbuying said:

Has anybody considered going short Gold ETF and long Silver ETF (for the same amount), which should be beneficial if GSR (ever) goes back to more normal levels?

I'd be really careful with a trade like that.  If you do a lot of those kinds of trades you end up paying dividends to the people who would have gotten dividends had you not borrowed their shares.

[HawkHybrid]

28 minutes ago, Panicbuying said:

Has anybody considered going short Gold ETF and long Silver ETF (for the same amount), which should be beneficial if GSR (ever) goes back to more normal levels?

 

not always a winning trade.

https://www.silver-phoenix500.com/gold-price-sees-modest-gains-us-stock-market-sell-accelerates

 

would that trade make you money in 2017?

gsr might take years to get back to normal levels.

imo gold feels too spiky up to go short right now and

silver can't seem to spike up enough.

 

HH

[sovereignsteve]

9 hours ago, Pete said:

Since I became a stacker I have seen the price of a 1 oz gold coin fluctuate between about £1,000 and £900 i.e 10% approx

I thought you are a seasoned stacker? Throughout the whole of 2014 and 2015 the price of gold was pretty much contained between £700 and £800. Were you not paying attention?

[Pete]

4 minutes ago, sovereignsteve said:

I thought you are a seasoned stacker? Throughout the whole of 2014 and 2015 the price of gold was pretty much contained between £700 and £800. Were you not paying attention?

Ooops - brain was disengaged.
Gold down to £700 not £900 so 30% fluctuation.
Bought my first ounce of gold on 22-Jul-2010 for £800 approx. so been an addict for 8 years now and showing the signs obviously.

😴

[Xander]

8 minutes ago, Pete said:

Ooops - brain was disengaged.
Gold down to £700 not £900 so 30% fluctuation.
Bought my first ounce of gold on 22-Jul-2010 for £800 approx. so been an addict for 8 years now and showing the signs obviously.

😴

I bought my first 1oz gold coin last year it cost £1,030. recently I could have bought the same coin for £930. Seems to be a pattern here.

[Pete]

7 minutes ago, Xander said:

I bought my first 1oz gold coin last year it cost £1,030. recently I could have bought the same coin for £930. Seems to be a pattern here.

I know what this feels like as I too have bought 1oz gold Brits and others paying over a grand each.
Hurts to see prices well below what you paid.
For me its even worse with silver at over £30 per ounce back when the piranhas were stripping the flesh of the bones.