which is currently a better buy - gold or silver?

[HawkHybrid]

since the 2015 low gold($1047) silver($13:15)

gold has risen ~17% and silver ~16.4%.

if a new bull market in pm's emerge which would it be

most profitable to keep current holdings in: gold only,

gold and silver, or silver only?

 

HH

[Stu]

I would guess that silver has a greater chance go going up percentage wise going by past performances. My strategy since I started to stack is to buy silver and gold at a ratio of 50 to 1. I hope to hold onto my stack for a very long period and could go see perhaps 2 bull markets during this time? I plan to stop buying when/if gold and silver reach £1100 and £20ish and start to offload some gold by average cost selling/top slicing when I think things have started to top out. Then buy on the way down again. Best laid plans, I am sure it will work out nothing like that. I am determined to hold onto silver however as I really do thing it will way outperform gold over the next 30 years. 

[KDave]

Short term - Silvers is primarily an industrial metal. Combine this with the economic backdrop as it stands, I would have to say gold first, silver second.

Longer time frames, silver is the better bet, as are the platinum group metals.

[Scuzzle]

I think with a GSR of 80 to 1 it has to be silver, I think silver might be slower than gold to take off but eventually it will take off, another plus is I can't see the possibility of governments ever clamping down on silver in the same way that they could with gold.  Once the banks have everyone on cashless it's a good bet that they will focus their effort on gold next and after that Bitcoin, they will be demonized as the "currency of the criminal" in the same way that they are working on the large denomination notes at the moment.  And if and when this happens people will just move into silver.

So in essence I would hold both, gold for short term gains, silver for long term and I can't see either letting you down the way the worlds finances and banking systems look to be heading.

[goldbones]

The problem with silver is that its like an economic bust and boom hedge its 50/50 because if you have an economic turn around and commodities in general rise then silver goes up, if you have an economic crash and commodities stay down or go lower then silver will do less bad but wont really do anything.

Its that later part of what i said that is the concern, silver is half a bullish play on the economy while gold is pure 100% bear.

So in a way silver is a good place to be if you're on the fence.

If things go the wrong way for the bears and the right way for bulls on the economy then silver might pick up to $20 while gold falls back to $800 the reason gold is 80-1 is NOT because silver is cheap but because gold is expensive.

Why is it now expensive? ...insurance premium rising!, gold is seen as insurance and as risks rise the premium rises if the risks fall then the insurance cost falls, there are other factors but i believe that is the current driver.

If you have a banking collapse you kind of have to ignore the paper prices because all those ETFs can blow up and the comex can fail if it is serious enough, stagflation is another consideration we are seeing inflation starting to rise in an economy that is stagnant this to my mind looks a little ominous even though they might play that as some sort of evidence of a recovery  if that picks up speed you could end up in a double digit inflation environment with central banks paralyzed to act to raise interest rates through fear of compounding the problem...not trying to scare people but that would be a bit of a nightmare scenario. You might on the one hand be happy your silver and gold has risen through the roof (and silver would do best here) although your cost of living will have gone up four fold and you'll probably be out of work and your pension funds and benefits will cease to exist. So you don't really want that to happen but at the same time you have to face up to the fact it might.

In 1980 they solved it by jumping interest rates up as high as 19% that killed the gold and silver stone dead, i don't think they could pull that off today, even if we hit 4% inflation they probably will still be considering 0% interest rates LOL  

 

[JB3]

I agree with much of the above, but I come to a different conclusion. Living in the UK, you lose ~20% of the value of silver as soon as you buy it. Another chunk in postage, or another ~20% if you buy it onshore and pay VAT. Gold, meanwhile, can be had in your hand for less than 5% of its price.

 

I agree there is probably more upside to silver relative to gold, but you need to go a long way before you make your money back.

 

Anywhere else in the world, I'd be buying pretty much only silver, maybe flirting with gold. Here in the UK, I buy gold and buy the occasional silver coin or bar for fun.

[JB3]

Addendum: just checked and, despite what I said above because of my initial foray into silver, I too hold Ag:Au in a 50:1 ratio by weight.

 

[mr-dead]

21 hours ago, KDave said:

Short term - Silvers is primarily an industrial metal. Combine this with the economic backdrop as it stands, I would have to say gold first, silver second.

Longer time frames, silver is the better bet, as are the platinum group metals.

 

The thing that worries me about platinum is that its primary use is in catalytic converters and there is a lot of research currently around the development of an alternative cheaper material (plus the currently slow drift to electric vehicles etc.) 

https://www.theengineer.co.uk/mullite-reduces-the-pollution-produced-by-diesel-vehicles/

I would stack a little platinum but I personally wouldn't feel comfortable with a large amount of it.

[Shinus73]

I've always found it difficult to decide which to buy, so I try to keep a 100:1 silver to gold ratio, but frequently end up overweight in silver. 

I found myself at 125:1 recently while buying silver to reach a milestone number, so am now buying more gold to get back to 100:1 and reach another milestone number, this time in gold.

[sovereignsteve]

I don't bother trying to macromanage my PMs.

I just mainly buy collectables, gold and silver, plus semi-numismatics for as close to bullion as possible.

A fair number of my sovereigns would be regarded as bullion of a sort ie probably worth more than bullion to collectors but not so much that I can't flog them as bullion if/when gold flies. The same would apply to my semi-numismatic silver. I have very little what could be classed as simply bullion.

Nobody knows how the prices of PMs will pan out or what the GSR is likely to be in the future, so don't beat yourself up about it trying to outsmart the markets.

 

[Pipers]

On 24/02/2016 at 08:15, goldbones said:

 

In 1980 they solved it by jumping interest rates up as high as 19% that killed the gold and silver stone dead, i don't think they could pull that off today, even if we hit 4% inflation they probably will still be considering 0% interest rates LOL  

 

Yes the early 1980s this was when I was young and it was the early 1980s when I asked my Grandad and his brother (worked on the stockmarket) where to put my money, with a smile my Grandad took a Sovereign out of a draw and said 'have a look at this, its got a different design on it a shield'. At this point my uncle butted in don't be daft put it in gilts Gold is expensive, then an extremely long exchange happened between them quite heated, i remember well. After a while and an intervention by my Nan and my Aunt it was decided I would put the money into Gilts as I had missed Gold and I would have to wait for that.  I waited till the late 1980s when my Grandad showed me Gold again. Gilts paid well in the early to mid 1980s. My Grandad and my Uncle were very competitive and always argued about everything. 

Funny what triggers a memory     

[HawkHybrid]

gold and silver are both up ~20% since the dec 2015 low.

if history repeats itself,

silver low 2002 ~$4.07 high 2011 ~$47.91 gain 11.77x

gold low 1999 ~$253 high 2011 ~$1883 gain 7.44x

if gold sovs cost +5% in 1999 and -2% in 2011 gain 6.95x

if we've already seen 20% gain then gain left 5.84x

if bulk silver bullion is +5% +20%(vat) to buy and -5% when selling

gain 8.95x with the 20% gain we already have then gain left 7.71x.

bullion silver stand to gain ~31% more than gold from this point?

because of the vat due in silver, investing in silver bullion only

makes larger returns if you manage to buy and sell close to the

extremes(top,bottom). if the bull trend has already started then

the advantage that silver has over gold is greatly reduced?

 

HH

[Bumble]

I would say just buy some of each and don't worry about it too much. The main differences are:

1. Silver use is approximately 50% industrial, so if industrial activity remains low, demand could fall. In particular, some new technology is being developed that will allow solar panels to use aluminium instead of silver, and this could hit demand. Gold has a relatively small industrial use, only about 10% of production. +1 to gold.

2. Most silver is mined as a by-product of other metals, such as copper, tin and lead, so if demand for industrial metals remains low, this could reduce supply. +1 to silver.

3. The market for silver is much smaller than that for gold, and so the price of silver is more volatile. If you think both metals will rise, silver will probably rise more, so as long as you can stomach the volatility, this is +1 for silver.

4. The gold/silver ratio is high at present, which usually means that both gold and silver are cheap, and may mean that both will rise. It does not mean that gold is expensive and silver cheap. Neutral.

5. Lots of big buyers are starting to focus on gold as a safe haven investment class, including some big hedge funds, and high net worth individuals. They are less likely to be interested in silver because it is too bulky. +1 to gold.

6. If Jim Rickards is right about gold having an important place in a future monetary system, then it could be revalued sharply higher overnight. Big + to gold if you buy the story, but who knows?

7. The government might try to confiscate your gold, but is unlikely to come after your silver. +1 to silver, unless you have some good hiding places.

[mr-dead]

You are able to buy gold far closer to spot than silver so easier dump large volumes on to dealers easily and quickly

Dumping a large amount of silver will take far longer and will require ebay/forum sales to recover the additional premium and taxes paid over spot.

[vand]

On 23/02/2016 at 08:15, goldbones said:

The problem with silver is that its like an economic bust and boom hedge its 50/50 because if you have an economic turn around and commodities in general rise then silver goes up, if you have an economic crash and commodities stay down or go lower then silver will do less bad but wont really do anything.

Its that later part of what i said that is the concern, silver is half a bullish play on the economy while gold is pure 100% bear.

So in a way silver is a good place to be if you're on the fence.

If things go the wrong way for the bears and the right way for bulls on the economy then silver might pick up to $20 while gold falls back to $800 the reason gold is 80-1 is NOT because silver is cheap but because gold is expensive.

Why is it now expensive? ...insurance premium rising!, gold is seen as insurance and as risks rise the premium rises if the risks fall then the insurance cost falls, there are other factors but i believe that is the current driver.

If you have a banking collapse you kind of have to ignore the paper prices because all those ETFs can blow up and the comex can fail if it is serious enough, stagflation is another consideration we are seeing inflation starting to rise in an economy that is stagnant this to my mind looks a little ominous even though they might play that as some sort of evidence of a recovery  if that picks up speed you could end up in a double digit inflation environment with central banks paralyzed to act to raise interest rates through fear of compounding the problem...not trying to scare people but that would be a bit of a nightmare scenario. You might on the one hand be happy your silver and gold has risen through the roof (and silver would do best here) although your cost of living will have gone up four fold and you'll probably be out of work and your pension funds and benefits will cease to exist. So you don't really want that to happen but at the same time you have to face up to the fact it might.

In 1980 they solved it by jumping interest rates up as high as 19% that killed the gold and silver stone dead, i don't think they could pull that off today, even if we hit 4% inflation they probably will still be considering 0% interest rates LOL  

 

 

You potentially have this the wrong way around. There will more likely be a massive supply shortage in the next recession. 

- Most of silver supply is mined as a byproduct of base metals industrials.

- Industrial silver usage is pretty inelastic, whatever economic conditions are like. 

- However, in an economic slowdow/slump commodity output will drop which will kill silver supply, just as demand from safehaven investors skyrockets. Primary silver miners will not be able to meet physical demand by themselves.

 

[vand]

I favour silver at current GSR of 74 or whatever it is right now. It's still good value right now, although not the once-a-decade "back up the truck" type of buy that it was just a few months ago.

Very long term (ie buy & hold indefinitely) fair price is 55 GSR

Long term term fair price (10 yr) is roughly 60-62

Medium term (5yrs) fair price is roughly 65-67.

 

I base these numbers off the GSR moving average for these time periods of spot gold/silver, and then add a proportional premium on for the shorter holding periods. The GSR ratio averages for these time periods are 54 (since 1968), 60 (last 10 years), and 63 (last 5 years).