The real Gold v Silver Ratio

[HighlandTiger]

Ok, so we've all heard of the Gold v Silver Ratio, and we know people like to use it to trade in one metal to buy the other as the ratio goes up and down. Which is fine if you trade in pretend metals on the EFT, but us for mere mortals it is not so easy in the real world because of the different premiums of buying and selling physical gold and silver.

 

Roughly, Gold comes with about a 5% delivered premium, and Silver (as long as we get it from places like STG), has about a 25% delivered premium. So that's the buying

 

On the selling side, the bullion dealers will give you spot value for gold, and on Silver you can get about 10% over spot if you sell back to STG.

 

It all means trying to use the GSR to trade metals can be very confusing as using the figures above selling gold in silver is more profitable than selling silver into gold for a similar movement in the GSR.

 

BUT.........This is where the Silver Forum can help us all out in the future. The more members we have, the more chances we have of being able to sell at around the same prices, (or a fraction less) than what the dealers are selling at. So rather than losing 5% on gold when we sell back to the dealers, we can offer it to other members for the same price as the dealers, or perhaps a few pence less. Buyers then get a good deal, and sellers maximise their returns. The same of course with silver, although it may be possible, due to some coins being numi's, and more silver "collectors" of getting slightly more than 25% over spot.

 

This brings us back to the ratio itself. Whilst the current headline ratio on all the graphs is just over 72/1, the real ratio for us guys buying and selling PM's is actually just over 60/1, (using the above estimated figures)  . It is this figure I will be keeping an eye on in order to maximise my stack.

 

They way I'm going to be looking at the Real GSR, is that anything above 60/1 then silver is a good buy, and it might be an idea to swap some Gold into Silver. Between 55/1-60/1 then its time to just buy either, or both gold and silver. Below 55/1 then Gold is the best buy and time to swap out some silver for some gold.

 

My stacking methodology will no doubt continue to evolve as I learn more about PM's, but I do intend to maximise my stacks profitability during my working years, aiming for just a 100% gold stack when I retire. (obviously I won't be buying PM's then, just selling my accumulated stack in order to live on, and gold is the best medium for me at that stage)

 

So I hope that The Silver Forum goes from strength to strength, because in order for us all to maximise our profitability, we need this forum to be a success.

 

That's it, ramble over.......

[Shamatti]

We already have lots of GSR threads, can we add to one of those please?

 

http://thesilverforum.com/topic/2079-gold-silver-ratio/?hl=%2Bgsr+%2Bratio

http://thesilverforum.com/topic/1908-silver-to-gold-ratio/?hl=%2Bgsr+%2Bratio

http://thesilverforum.com/topic/1672-gsr-monitoring-thread/?view=findpost&p=25799&hl=%2Bgsr+%2Bratio

http://thesilverforum.com/topic/1641-silver-gold-ratio/?hl=%2Bgsr+%2Bratio

http://thesilverforum.com/topic/1612-ratios-now-vs-the-future/?hl=%2Bgsr+%2Bratio

 

Thanks.

[HelpingHands]

There's always room for one more.

[a_a]

Only one thread per topic allowed, and make every topic a sticky, for ease of use.

[mr-dead]

I think the only way to play the GSR game properly is to ditch all or part of the physical stack and use bullionvault or equivalent.

[Pete]

Is there not an old saying - " .. one man's profit is another man's loss .. " ?

[Danny-boy]

Is there not an old saying - " .. one man's profit is another man's loss .. " ?

Yes, just make sure you are the one in profit!!!

[garthy]

It's always interesting to ask the average Joe about the gold to silver ratio, You'll find they regard silver with a way higher value than it currently is, the question I've always asked is, "if I told you gold costs £800 an oz how much would you say an oz of silver is" usually if someone has no clue they'll always say over £100.

[Danny-boy]

It's always interesting to ask the average Joe about the gold to silver ratio, You'll find they regard silver with a way higher value than it currently is, the question I've always asked is, "if I told you gold costs £800 an oz how much would you say an oz of silver is" usually if someone has no clue they'll always say over £100.

That's very interesting.

Lucky we are all hoovering it up for £15 odd per ounce.

[Stu]

Stats I have read imply silver is mined currently at a ratio of 9 to 1. Historical ratio is around 16 to 1? Compound this with more available gold than silver above ground. I think I will be stacking silver till my back gives out. May convert to gold when my bus pass drops through the letterbox though.

[Danny-boy]

Stats I have read imply silver is mined currently at a ratio of 9 to 1. Historical ratio is around 16 to 1? Compound this with more available gold than silver above ground. I think I will be stacking silver till my back gives out. May convert to gold when my bus pass drops through the letterbox though.

Lol, like your thinking Stu. I'll take some of that action.