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GSR 92.68:1 27 year high


mr-dead

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Just had the below update from bullionbypost by email:

 

Gold/Silver ratio highest since 1992 as gold price hits $1,438 per ounce
The gold/silver ratio is at a near-record level of 92.68 following continued price rises for gold this week. The ratio - how many ounces of silver buys an ounce of gold - hasn't been this high since October 1992; almost 27 years ago.

The driving factor for this ratio change is the gold price. Gold is currently at a six-year high, having passed the $1,400 threshold seen by many as a psychological barrier. Gold is now priced at $1,434 per ounce - a gain of $23.54 per ounce or 1.68% in the last 24 hours.

Today's price surge coincides with a 327 point (1.15%) drop in the Hang Seng stock exchange in Hong Kong, with investors in eastern Asia concerned that Presidents Trump and Xi won't reach an agreement to end the trade war when they meet at the G20 Summit.

Despite the rise in demand for gold, silver is still yet to experience the same level of interest, but the traditional elastic relationship between gold demand generating silver demand could see the precious metal experience a surge in price in the near future.

 

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Yeah i noticed the nose bleed levels for the G:S ratio earlier today.

Gold is absolutely powering ahead and silver is rising but is getting left behind. One could speculate on why we are getting to these levels. i have speculated before, as have others. i see the big round number of 100 as a target - i have been buying some gold and silver over the last month or so on the Kinesis platform. Not having to contend with coin premiums, VAT and the like, brings the huge disparity between the relative prices into clear focus. A lot more silver has been bought by what i will be take to be relative average Joe's who are buying a handful of 200 oz lots - i saw a 9400 KAG (ounce) lot go through this morning - a chunky amount. There is getting on for 3 x as much value of silver has been bought so far. As the ratio climbs, the relative amount of silver bought has been increasing. Interesting times.

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If you study the history of the last bull market, the GSR was sitting at around 50 in late 1999 when gold was putting in its ultimate bottom. It then climbed all the way to 80 around mid 2003 before silver began to catch a bid and the ratio quickly fell again back to around 50 before the credit crunch really hit in 2007 and it gyrated wildly.

So don't be surprised that the GSR is climbing. There is precedence that gold leads the early part of the bull market and silver eventually catches up when the bull market gains traction and starts drawing more investors in.

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Whilst some may look back on the gold to silver ratio with some nostalgia, I think we need to recognise that there have been some factors specific to gold that have resulted in the current gold surge (and the resulting gold to silver ratio):

·         The buying of gold by China, Russia, India etc.

·         The desire by some of the above countries to reduce dependence on the US dollar for international trade.

·         Oil-for yuans (backed by gold).

·         Basel III reclassifying gold as a Tier I asset for banks’ balance sheets.

So, these are four factors that are very specific to gold (which are in addition to the usually cited safe haven in times of global tensions, recession, etc).  Gold looks to be getting a new lease of life as a medium of exchange.  I don’t think this can be said of silver.  Yes, silver is used in production (and if there is a recession, less silver will be needed!), so, what else can be said in its favour in order to justify a reduction in the gold to silver ratio?  Simply expecting the ratio to return to levels nearer to what has been seen in the past does seem a bit simplistic.

I am starting to wonder whether the often cited gold to silver ratio is an irrelevance in this day and age.  Just because there has been a loose relationship in the past, surely this does not necessarily mean that this ratio is still relevant today?

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3 hours ago, Zhorro said:

Whilst some may look back on the gold to silver ratio with some nostalgia, I think we need to recognise that there have been some factors specific to gold that have resulted in the current gold surge (and the resulting gold to silver ratio):

·         The buying of gold by China, Russia, India etc.

·         The desire by some of the above countries to reduce dependence on the US dollar for international trade.

·         Oil-for yuans (backed by gold).

·         Basel III reclassifying gold as a Tier I asset for banks’ balance sheets.

So, these are four factors that are very specific to gold (which are in addition to the usually cited safe haven in times of global tensions, recession, etc).  Gold looks to be getting a new lease of life as a medium of exchange.  I don’t think this can be said of silver.  Yes, silver is used in production (and if there is a recession, less silver will be needed!), so, what else can be said in its favour in order to justify a reduction in the gold to silver ratio?  Simply expecting the ratio to return to levels nearer to what has been seen in the past does seem a bit simplistic.

I am starting to wonder whether the often cited gold to silver ratio is an irrelevance in this day and age.  Just because there has been a loose relationship in the past, surely this does not necessarily mean that this ratio is still relevant today?

Its just a comparison, as there is no gold or silver standard its just two commodities compared to each other and as relevant as palladium, platinum, rhodium tc...but if your interested in moving from one to the other then of course exchange rates matter.

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I hear people wanting to move from silver to gold.

those that I hear wanting to move from gold to

silver hope to move back to gold at a later date

with more favourable rates.

how many want to move permanently from gold

to hold silver?

 

HH 

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14 hours ago, HawkHybrid said:

I hear people wanting to move from silver to gold.

those that I hear wanting to move from gold to

silver hope to move back to gold at a later date

with more favourable rates.

how many want to move permanently from gold

to hold silver?

 

HH 

I plan to hold onto both, and keep stacking both.

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6 minutes ago, HawkHybrid said:

 

do you plan to move from gold to silver?

 

HH

No, I'm still doing my usual, where I'll buy some of both regularly but with a little more emphasis on silver. As of now I don't plan on changing anything.

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I'm happy to trade paper gold for paper silver and back again by the gsr, but permanently going to silver? Personally, my only reason to trade gsr is to get more gold. Silver is just a fun vehicle to help that happen. 

It would take a gsr of 100 and some compelling reasons to trade my physical. Never permanently and only to get more gold. 

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On 01/07/2019 at 01:51, mdp2505 said:

I'm happy to trade paper gold for paper silver and back again by the gsr, but permanently going to silver? Personally, my only reason to trade gsr is to get more gold. Silver is just a fun vehicle to help that happen. 

It would take a gsr of 100 and some compelling reasons to trade my physical. Never permanently and only to get more gold. 

The idea of trading the GSR is that you are indifferent between either metal, especially if you are just trading paper.

If you have a preference for gold then you should own more gold!

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1 minute ago, vand said:

The idea of trading the GSR is that you are indifferent between either metal, especially if you are just trading paper.

If you have a preference for gold then you should own more gold!

Not so.

For paper trading I am entirely indifferent and completely agree. That is simply a case of asset allocation and rebalancing by predetermined rules.

The idea of trading the GSR is to provide a return on an asset class that can only provide capital appreciation. Whether that return is taken in fiat currency or more metal is up to the owner.

I do, however, have a preference for gold when it comes to physical. I use the GSR to try and obtain future gold at a cheaper price now. If it doesn't work out that way, and the only downside is that I have lots of extra silver, which is not a bad problem to have.

So you say, 'If you have a preference for gold then you should own more gold!' I agree. My current plan is to do that by buying silver.

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personal preference should have nothing to do

with trading the gsr. you should be swapping

from one to the other at strategic times based

on data and analysis.

recognising that the current pm's rise has

favoured gold more than silver is not

preferring gold over silver. it's just correct

market analysis. this is how the market is

trading so you follow it.

you can have your own preferences and

trade the gsr as long as you stick firmly to

a working strategy. ie hold your profits

(draw downs) in your preferred metal that is

completely separate from your trading.

reinvested non draw down profits should

still follow the strategy.

imo trading the gsr is best done using paper

as opposed to physical bullion.

 

HH

 

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39 minutes ago, HawkHybrid said:

imo trading the gsr is best done using paper

as opposed to physical bullion.

It's not really an opinion is it? 😉As it's impossible to trade close to the gsr using physical, therefore to try to do so is not really trading the gsr.

Profile picture with thanks to Carl Vernon

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55 minutes ago, sovereignsteve said:

It's not really an opinion is it? 😉As it's impossible to trade close to the gsr using physical, therefore to try to do so is not really trading the gsr.

 mine is a different opinion to people like mike

maloney etc who insists on holding physical

bullion and then includes accounts on how they

successfully traded the gsr.

in theory it is possible, it's just much more

practical using paper. (sovereigns to junk

silver and back, over many decades. what

they don't tell you when presenting their

fancy charts showing how profitable it can be)

I'm sure people can point out to me how

possible it is and how bias I am when I

speak against the gsr and physical silver

pumpers that promote it.

I think those that are buying high purity physical

silver bullion to play the gsr haven't thought it

through. at least with how the silver market is

in the uk, a rough guess is that the returns above

simply holding gold are likely to be much smaller

than figures that are quoted.

 

HH

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12 minutes ago, DarkChameleon said:

And a new record gsr 93.2 and we all know it's only going to go further, the benefit though is silver price is still growing so if you didn't intend on swapping your still good.

it's not a record.. GSR spiked > 100 in the early 90s and spent over a year at 97 during WW2

 

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32 minutes ago, vand said:

it's not a record.. GSR spiked > 100 in the early 90s and spent over a year at 97 during WW2

 

A new record in modern times..that sound better?...I never expected it to reach that so soon, gold is back on a tear...it's following oil right now and proved that last drop was just Trump pulling another photo op and not real meat behind it.

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