Swapping Silver for Gold

[Junior]

There are many reasons to be invested in precious metals and everyone will choose his/her path towards how they invest. Some will choose gold because it’s arguably history’s most prized and stable source of value. Some will choose silver due to the undervalued nature of this commodity. Some will dabble in both. Some will do platinum or palladium.

I chose silver and I started out thinking and hoping (as I still do) that by buying silver while underpriced to gold, I could load up on silver and wait. The ratio between the two metals has most recently seen highs above 100:1 and averaged anywhere from 70 to 80:1. If you’re like me, you were hoping to stack silver in anticipation for the day that the ratio between silver and gold turns more towards 30:1, 20:1, or perhaps even 15:1 or better. At which point, you would likely swap your silver for gold at the more attractive and favourable ratio.

Now many people don’t believe that we’ll ever get back to a 20:1 or 15:1 ratio. Some believe this because they see silver as less monetary than in previous decades and centuries and instead view silver more closely linked to industrial use. A fair point I might add. However, there must be some threshold for those who are invested in silver and hoping to swap silver for gold at a more favourable ratio. The question I ask is, what is your ratio?

If you are hoping to someday swap your stack (or a portion of it) into gold, what ratio would you consider doing it at? 30:1? 40:1? Or would 50:1 suffice? Or are you a die hard and wouldn’t consider it until approaching the 20:1 ratio?

I’d love to hear people’s thoughts and opinions on this.

[goldsilverdash]

I wouldn't do this in physical form, I simply think it would be too much trouble. However, I do have some digital tokens backed by silver, and some of those I would gladly exchange for the gold equivalent if the ratio went to 50:1. I think the wisest would be to exchange only a portion at a time, and then to see if the ratio changed further in the direction towards 40:1, and in that case be able to exchange another portion to gold, and so on. Ultimately, for me, the point would be to accumulate more physical metals.

[goldsilverdash]

Also, even if you are not planning to ever actually swap silver for gold, the ratio can still be a relevant factor to consider when deciding what to buy at a given time. But there are other considerations like the high premiums on silver that favour buying gold over silver now. Personally, I will not buy any silver bullion at current prices due to these outrageous premiums. (And if I lived somewhere that applies VAT on top of that, then I wouldn't even dream of buying silver). I have been focusing exclusively on gold for the last two years, and will not consider buying silver again until the premiums go down... a lot.

[DarkChameleon]

11 minutes ago, goldsilverdash said:

Also, even if you are not planning to ever actually swap silver for gold, the ratio can still be a relevant factor to consider when deciding what to buy at a given time. But there are other considerations like the high premiums on silver that favour buying gold over silver now. Personally, I will not buy any silver bullion at current prices due to these outrageous premiums. (And if I lived somewhere that applies VAT on top of that, then I wouldn't even dream of buying silver). I have been focusing exclusively on gold for the last two years, and will not consider buying silver again until the premiums go down... a lot.

The benefit of silver premiums works out well, when I could get $40 for eagles and then exchange for gold it worked a treat but yes, you'd have to be a fool to part out gold for premiums in silver right now, its not worth buying silver but really not worth swapping gold into silver.

[DarkChameleon]

36 minutes ago, goldsilverdash said:

I wouldn't do this in physical form, I simply think it would be too much trouble. However, I do have some digital tokens backed by silver, and some of those I would gladly exchange for the gold equivalent if the ratio went to 50:1. I think the wisest would be to exchange only a portion at a time, and then to see if the ratio changed further in the direction towards 40:1, and in that case be able to exchange another portion to gold, and so on. Ultimately, for me, the point would be to accumulate more physical metals.

Silver will not reach 50-1  without major force, the way to make money or profit is to swap out when close to, like when silver was under 70-1 as everyone waited for 60, or 120-1 when everyone was talking about 150-1... talk is very rarely achieved because some talking heads will always one up so you'd reach your comfort zone then everyone is talking about waiting till the next round figure....the only ones ever selling at round figures are the investment banks with automatic sell or buy orders...us mear owners are too slow to do that so keep it real and make money...a 70-1 then 120-1 sure beat a 67-1 and 128-1 tat you missed waiting for it to go to 50-1 and 150 - 1 and are still holding on to having made no profit but just horded...are we stackers or holders cos horders never make money, then just leave other people money.

Edited March 18, 2022 by DarkChameleon

[goldsilverdash]

Just now, DarkChameleon said:

Silver will not reach 50-1  without major force, the way to make money or profit is to swap out when close to, like when silver was under 70-1 as everyone waited for 60, or 120-1 when everyone was talking about 150-1... talk is very rarely achieved because some talking heads will always one up so you'd reach your comfort zone then everyone is talking about waiting till the next round figure....the only ones ever selling at round figures are the investment banks with automatic sell or buy orders...us mear owners are too slow to do that so keep it real and make money...a 70-1 then 120-1 sure beat a 67-1 and 128-1 tat you missed waiting for it to go to 50-1 and 150 - 1 and are still holding on to having made no profit but just horded...are we stickers or holders cos hordersnever make money, then just leave other people money.

Maybe not, nobody knows. It was below 50 in 2011, and if silver spikes like it did then, it might happen again. Even 40 or 30 might happen, but I'm not holding my breath.

[DarkChameleon]

37 minutes ago, goldsilverdash said:

Maybe not, nobody knows. It was below 50 in 2011, and if silver spikes like it did then, it might happen again. Even 40 or 30 might happen, but I'm not holding my breath.

And in the time intakes to get to 50or 40 you could have tripled yourstack by swapping out at the 70 and 110s 5 or 5

6 times allowing for premiums.

[Bigmarc]

My "personal" opinion is the fair value is 64/1, I stack based upon this ratio (about 15 Oz slv per sov). Recently I did sell a fair amount of 999 thanks to our cousin's across the pond and their hysterical silver squeeze movement (sorry). Most of the money went to gold and some into crypto (guess which one I am in profit with?). To answer your question, I will swap 50% at 45/1. Then 50% at 40/1, then 50% at 35/1 and so on. Also I am currently not buying physical just getting money together for next move (takes a while).

 

[DarkChameleon]

1 hour ago, Bigmarc said:

My "personal" opinion is the fair value is 64/1, I stack based upon this ratio (about 15 Oz slv per sov). Recently I did sell a fair amount of 999 thanks to our cousin's across the pond and their hysterical silver squeeze movement (sorry). Most of the money went to gold and some into crypto (guess which one I am in profit with?). To answer your question, I will swap 50% at 45/1. Then 50% at 40/1, then 50% at 35/1 and so on. Also I am currently not buying physical just getting money together for next move (takes a while).

 

Think premium.what silver would you sell to buy gold, some eagles over here are $35 and gold is $1950 which is a real ratio of 55 to 1...isn't that close enough?....so sell eagles and buy bullion gold..when will real world ratio be less then that?.

[Bigmarc]

5 minutes ago, DarkChameleon said:

Think premium.what silver would you sell to buy gold, some eagles over here are $35 and gold is $1950 which is a real ratio of 55 to 1...isn't that close enough?....so sell eagles and buy bullion gold..when will real world ratio be less then that?.

That's right, the premium was good enough to warrant me selling a bit. I am not a massive fan of 999 so am happy to sell first, especially to change into gold when the time is right.

[DarkChameleon]

15 minutes ago, Bigmarc said:

That's right, the premium was good enough to warrant me selling a bit. I am not a massive fan of 999 so am happy to sell first, especially to change into gold when the time is right.

People forget to take into account differences in premiums, gold premium is nothing comparred to silver, making it a silver play...they think it's going to take them 80 eagleswhen it's going to be less then 60...when I was trading sovereigns for a tube of eagles each there were plenty of takers ear me as the eagle premium stereo low then but nowthey are trying to buy eagles and find any at ridiculous 40% premiums.

[Petra]

Can someone remind me what this ratio is and how to work it out? Cheers 

[modofantasma]

21 minutes ago, Petra said:

Can someone remind me what this ratio is and how to work it out? Cheers 

Gold price divide by silver price 

So 1465 divide by 18.95 as of now about 77

Bullion By Post have a chart for it also 

https://www.bullionbypost.co.uk/price-ratio/gold-silver-ratio-chart/

[modofantasma]

Just now, modofantasma said:

Gold price divide by silver price 

So 1465 divide by 18.95 as of now about 77

Bullion By Post have a chart for it also 

https://www.bullionbypost.co.uk/price-ratio/gold-silver-ratio-chart/

That is the price ratio anyway... You might get people talking about other ratios such as amounts mined or 'above ground' amounts as a ratio but generally people are referring to the price ratio 

[Junior]

Great thoughts by everyone. Fortunately for someone like myself, I do not pay VAT on my 999 or 9999 silver. Still have hefty premiums on the eagles and maples where silver is about 31-32 CAD spot price, but bullion dealers selling the eagles and maples are charging 41-42 CAD. So that works out to be around 35% premium. Quite damaging if one is counting their pennies and dollars.

On the plus side, I’ve kept a log book on what I’ve bought over the years and the price I paid. So regardless of the ratio itself, something I paid $22 CAD six years ago I can sell for about $32 CAD and move that into gold without paying taxes on the sale of the silver.

Now the only thing I haven’t mastered yet is calculating the true inflation value to see how much value I actually lost (if any) despite the $10 per ounce profit I could make on several tubes of silver maples.

That’s sort of where I’m not the best at figuring out which metal (silver or gold) is the better inflation hedge. The experts say gold is better, but the numbers between silver and gold is what I’m curious about.

[Petra]

2 hours ago, modofantasma said:

Gold price divide by silver price 

So 1465 divide by 18.95 as of now about 77

Bullion By Post have a chart for it also 

https://www.bullionbypost.co.uk/price-ratio/gold-silver-ratio-chart/

Thank you 😁

[goldsilverdash]

4 hours ago, DarkChameleon said:

Think premium.what silver would you sell to buy gold, some eagles over here are $35 and gold is $1950 which is a real ratio of 55 to 1...isn't that close enough?....so sell eagles and buy bullion gold..when will real world ratio be less then that?.

That is a good point. I am actually planning to sell a few select silver coins to try to cash in a bit on these premiums we're seeing now, and I might well end up shifting some of that into gold instead. (But this is only getting rid of a few coins that I don't focus on in my stacking. I wouldn't swap any bigger portion of my silver for gold.)

[DarkChameleon]

8 minutes ago, goldsilverdash said:

That is a good point. I am actually planning to sell a few select silver coins to try to cash in a bit on these premiums we're seeing now, and I might well end up shifting some of that into gold instead. (But this is only getting rid of a few coins that I don't focus on in my stacking. I wouldn't swap any bigger portion of my silver for gold.)

When I was buying eagles at $16 to $22, which was the most extreme time of buying, it was not worth selling at $25 but the greed of the large suppliers have now made it worth dumping eagles for gold, you still have to ask yourself what's going to happen in the future for gold but the premium for eagles is not going to last, it has to drop so when it does the silver price might not drop that much but they jumping back to eagles will become viable if that's your chosen coinage...inflation can work in your favor when it meets greed..play with the investment banks I bet they're selling eagles right now so don't want the premiums to drop but you let the mines reopen and the flood of planchet and ingots will drive silver back in a hurry then jt will become selling anything not nailed down to make money, then you buy buy buy.

[HillWalkerDundee]

Why do people think that the ratio will go down as a result of the price of silver going up. Far more likely is the price of gold will go down. Both markets can be manipulated and with sovereign states holding vast quantities it is in their interest to force the price down in order to accumulate more.

[MetalMandible]

I actually swapped out silver for gold last year when the ratio dipped below 70:1 (iirc).  I used a very well known online bullion dealer and was overall satisfied with the process.  I only shipped enough silver to receive one ounce of gold, as it was mainly an experiment to see how it would hypothetically go if the ratio were to drop to 50:1 or less.  For every 10:1 at 50:1 and below i would trade out more and more silver until I was only left with the most collectible and most highly sought after pieces that I probably will hold onto until they are pryed from my icy dead grip with a crowbar.

[bluemoon]

The silver I have feels like a ball & chain now. Bulky, heavy and space consuming. It was a good deal during the downturn but I fully intend to swap it for gold when the time is right. Gold is so much more efficient and reliable. Silver is good if you like a bit of speculating but gold is the better hedge against inflation. Just watching the GSR for the right time to swap.

[goldsilverdash]

Buying silver only in order to get more gold seems to me like such a roundabout way. If gold is all you want then just buy gold, I say.

I stack both gold and silver, and if I would feel that I have "too much" silver in relation to how much gold I have, I would buy more gold.

[Junior]

34 minutes ago, goldsilverdash said:

I stack both gold and silver, and if I would feel that I have "too much" silver in relation to how much gold I have, I would buy more gold.

Love it!!!!!

"I've got too much silver. So to offset it, I will buy more gold!"

My Hero right here!!!!

[DarkChameleon]

7 hours ago, MetalMandible said:

I actually swapped out silver for gold last year when the ratio dipped below 70:1 (iirc).  I used a very well known online bullion dealer and was overall satisfied with the process.  I only shipped enough silver to receive one ounce of gold, as it was mainly an experiment to see how it would hypothetically go if the ratio were to drop to 50:1 or less.  For every 10:1 at 50:1 and below i would trade out more and more silver until I was only left with the most collectible and most highly sought after pieces that I probably will hold onto until they are pryed from my icy dead grip with a crowbar.

Icey dead grip?, so sometime in november?..lol.

[DarkChameleon]

5 hours ago, bluemoon said:

The silver I have feels like a ball & chain now. Bulky, heavy and space consuming. It was a good deal during the downturn but I fully intend to swap it for gold when the time is right. Gold is so much more efficient and reliable. Silver is good if you like a bit of speculating but gold is the better hedge against inflation. Just watching the GSR for the right time to swap.

Watch the G to your stack ratio..it can be very different, its like judging apples and oranges, unless your stack is all generic they have a premium which gold bullion doesn't real.y so real world ratio is a lot different, like I stated, eagle to gold is like 55 to 1. I'd say brits are maybe 65 to 1, so you're ahead of the curve already, only really bullion bars and generics are going to be 78 to 1.