The Gold Silver Ratio: History Repeats




[silver coins]

Today's gold silver ratio is an interesting anomaly, highlighting several important reasons you should be a part of the coming big move up in silver. This ratio is perhaps one of the more glaring disconnects in the market fundamentals underlying both of these precious metals and/or alternative currencies.

The gold silver ratio significantly reinforces the urgency behind loading the boat with silver coins.

Historically speaking, the gold silver ratio has rested somewhere between 15 and 10 to 1, reflecting the average supply of each metal. There have been times throughout the history of money where the ratio has been even lower—China had a 4 to 1 ratio at one point and the ancient Egyptians demonstrated a 1 to 1 ratio at one point.

The Reverse Reality: Silver to Gold

If we could subtract the distractions and take a pure view of the gold silver ratio, which should always represent a reflection of true supply characteristics, we would find an entirely different reality.

First off, there is much more gold available below and above ground than silver.

Practically all the gold ever mined still exists above ground in some place or another. Silver, on the other hand, is scarcer, both below ground, where it is mined primarily as a by-product, and above ground, where it exists in our tools of the modern world… and has been depleted… and will be found only as scrap in minute amounts in the trash heap.

When taken on what should be considered and what will be considered as markets revert back to the mean (often this happens quickly and without much warning), the ratio may actually reverse course, making silver more valuable than gold.

Ratios that Matter - Why You Should Act Now



Of course, the idea of the gold silver ratio reversing itself strikes at a point where the price of gold hovers at the $1000/oz mark.

Am I suggesting a ratio of silver to gold that reflects true supply? In a way, yes.

Yet, as much as I would like to believe in silver at $2000/oz, the factors that will bring about this correction, or reversion back to the mean, will have more to do with value than dollars. The likely catalysts for the return will involve serious devaluing of the dollar and hyperinflation.



As difficult as it is to imagine this in the US, or any other modern society, we are at the mercy of history, for no fiat currency has survived more than 50 years in the 5000 years humans have experimented with currencies. And the current financial crisis shows us that, if the storm were to occur, now would certainly be the time.

We are certainly treading in unknown waters and it is very possible that this ratio could revert very quickly, from the current 75 to 1 to the oft-quoted historic 15 to 1.

In any case, you need to get your silver coins now!

The bullion banks typically need only a minute — as their algorithms quickly trade tens of thousands of Comex futures contracts — in order to induce a dramatic shakeout of weak long positions.

Gold And Silver Prices - The Overview

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