Gold:Silver Ratio Falls as Silver Rises

The WealthCycles Staff

On September 26th, 2010, we released a Chart Blog showing a gold silver ratio that was 60.34, and specified that silver has outperformed gold in the market by far.

Now, a few months later, we return to the same graph, only to show a different gold silver ratio of 46.96! (Chart current to end-2012 shows 52 presently)

Gold Silver Ratio 1871 2012

Historically speaking the gold silver ratio has been around 12, meaning 1 ounce of gold is equal in value to 12 ounces of silver.

If you take into account how gold and silver have both gone up dramatically in the past year and are likely to continue rising, silver should continue to outperform gold. The gold silver ratio will continue to fall, as it already has by dropping from 60 to 47 in just four months! But still, silver still has a long way to go to reach the historical gold silver ratio of 12.

As well as gold has been performing, silver has really shone when it comes to return on investment, outperforming gold, and every other asset on the planet. So keep this graph in mind, and keep an eye on the ratio, because, according to history, the ratio will only continue to fall in favor of silver.

Hey guys...I made a brief post on my own blog NZ Bullion recently about the Gold/Silver ratio. Would you mind if I posted your charts on my site please?

Naturally I would credit GoldSilver.com and Wealth Cycles. I'm already a HUGE fan of Michaels...and paid member here.

On another note...I've read "The Guide To Investing In Gold And Silver" by Michael, and on his mandatory recommendation, have started reading Kiyosaki's "Prophecy".

I have a question...Kiyosaki says that American baby boomers upon reaching age 70 are required by law to sell off part of their 401k retirement portfolio...thus helping create a stock market crash. Is it possible the US government could just change the law and instantly rectify this huge oversight and would that be an easy fix? Ordering up cash seems to be just as easy...

Regards,

Tim

Hello Tim,

For distribuiting the graph first refence our terms of use. There is a limitation on the number of people you can share this with. You can apply for an extension. Simply email support@wealthcycles.com.

To your second question. Yes, that is entirely possible. Although, the political will has to be there. The entire make up of the US Federal Legislature and Presidency can change within only 6 years. Now how likely that is, that is a different question. 

nicholas - WealthCycles Administrator

Hello Tim,

Please reference the Terms of Use. 

http://wealthcycles.com/terms-use

Thank you,

@jbarbera87 great answer! I learned this from Mike's Book guide to investing in gold and silver -

"Real" Value vs Price.

How many gold ounces does it take to buy the DOW?
or
A house?
or
Silver?
or
A car....a suit!

you get the idea...the price changes but the VALUE is what is important! Probably the biggest piece of financial genius I've ever learned!

Dear Mike,

You are much more bullish on silver than gold. However, I would like you to address the following questions/concerns.

When our current monetary system breaks down and the replacement uses gold as a monetary metal while at the same time silver is not being used by governments around the world as a monetary metal then the monetary premium of gold over silver may cause ratio to go back to even 1:100 despite a huge spike in silver due to short supply and huge industrial demand.

How was the ratio between gold and silver when gold was a monetary metal regainings its monetary function while silver was still just an industrial metal. This will be interesting times to look at as the future may have the same scenario unfolding. I think it will be interesting to look at the ratio between gold and silver in three different cases:
a) gold-silver both having little monetary function
b) gold having a monetary function, silver being ignored
c) gold and silver both having equally strong monetary function.

In my view, gold is money and silver is extremely important industrial commodity. If industrial shortage of silvers comes before gold world-wide official monetary function then ratio will keep going down, but as soon as gold is recognized officially as monetary metal while silver being dismissed due to its dwindling stock the ratio may jump back to 100 or so.

Do we have in history examples of financial turbulent times when we could look at comparison between gold and ANY extremely important commodity? It could give some clue what will happen to silver if it just gets the role of extremely important commodity but not a monetary metal.

To spice it up, if one believes in different conspiracy theories then one wonders where does the existing gold stock ends up since coffers of "public" central bankers are being emptied so that manipulation can continue. I would guess it ends up in the coffins of very wealthy individuals who plan to milk the current system as much as possible and then switch to the gold standard to get big return and increase their wealth even further. For me this pendulum, fiat currency versus gold money is just the best way to fleece the public from their savings.

all the best,
Radek

Wait a minute.... I left a response for alphawolff and it did not get posted? What the h**l? Why? DId it contradict with what this site is trying to convey? Listen I agree with the issues and the concepts presented by MIke, but to censor my response in favor of another response that included QE is wrong. That's really messed up... doing that makes you no better than our government and their affinity for censorship for the sake of propagating their agenda.

Clam down. We don't automatically delete anyone's comments or cesenor anyone's opinion.

All comments posted by anonymous users have to be checked by an administrator for spam. This can sometimes take a while if we are really busy. If you don't want to wait then subscribe for an account.

nicholas - WealthCycles Administrator

QE2

1. US-dollar is sinking, like Titanic. Inflation is rising world wide. China is printing money. More money printing on the horizon, in U.S.

2. (TA) Yes, there is a head&shoulders pattern in almost every major stock index Worldwide, now. (FA)Watch out for the inflated "discounted cashflow" hysteria on Wall Street. 50-100 years of dividends to pay for purchase of the stock. If company and nation survives & thrives in the coming 50-100 years, without confiscation by government, interfering wars, major natural disasters, major depressions or hyper-inflations.

3. Do they ? You must mean precious metals, like gold. If gold and stocks are rising. Currency's are probably falling.

1) the Dow hitting 12000 is only significant in that 12k represents a whole round number, which usually act as a psychological barrier. Its at these points that people pause in their buying of the dow. What is significant is that it broke higher timeframe resistance that went all the way back to fall '08. Will it stay above or break below? No one knows.

2) SO far there is not enough chart data to suggest any head/shoulders forming. Out of all the indices, the DOw has certainly been the strongest... and todays price action, breaking into new highs, suggest strength. When I was still a novice trader, I used to think everything was forming a top, like a head/shoulders or double top.... but right now this is simply not the case with the Dow or the S&P. The NAsdaq and the Russell 2000, however, are weaker and should be closely monitored.

3) The fact that metals and equities are moving together is a relatively new phenomenon... starting only in the last three years of trading. i personally think it indicates an excess of liquidity... which needs to find a home somewhere. SO it gets soaked up in risk assets.

1. Does anyone have a comment on the significance of the Dow hitting and going over 12,000?

2. Are we in the right shoulder rise of a head & shoulders movement before it crashes again?

3. Usually stocks and metals move opposite each other, but right now they are both rising. What does that mean?

The whole reason for the Dow rising is because of QE the Feds are doing. They are pumping money to inflate the market so everything appears to be running smoothly. What you have to look at is the REAL value of the market and that's comparing it to Gold. As the Dow/Gold ratio gets smaller the Dow is loosing value even if it's rising in price.

It's the difference between value and price that you need to see.
Because of QE a lot of things are going to rise but there value compared to Gold is going down.

With the Dow hitting 12k on such weak volume, it is destined to turn south, and hard. It is now up 86.1% over the low of 6469. How long does anyone thing THAT will continue?! Maybe the volume will start pouring in, we'll have a blow-off top at 14k, and make a fortune on DIA puts all the way back down.

Great post Mike. I'm a silver bug myself. I think silver is the winning ticket and a great investment for those without a lot of capital to invest in metals.

If you don't have any alternative investments it is definatelly a good place to start.

nicholas - WealthCycles Admin

Awesome chat. Stick to the fundamentals. Buy silver on dips. Hang on for the ride to wealth!

Sticking to the fundamentals is what we believe in doing. They play out over the long run.

nicholas - WealthCycles Administrator

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