Silver price

[hwrnhetcxyc]

Man this guys worth is going up every day.

yeah, if he says something costs an arm and a leg, you know it's expensive

[Pat K]

Man this guys worth is going up every day.

yeah, if he says something costs an arm and a leg, you know it's expensive

[hwrnhetcxyc]

It's amazing to me that $20.67 used to be worth an ounce of gold. Soon that won't be worth an ounce of silver.

Silver closed at $20.67 today

Gold $1002.50

[Caleb]

I keep thinking that silver needs to be trading at a 16/1 ratio with gold. If that's true, then silver ought to be at around $62 an ounce right now, and is thus still a good buy

[malcolm]

I keep thinking that silver needs to be trading at a 16/1 ratio with gold. If that's true, then silver ought to be at around $62 an ounce right now, and is thus still a good buy

Silver is an industrial (as well as precious) metal.  In the Great Depression, the gold/silver price ratio rose dramatically, due to decreasing industrial demand.  In 1939, the Au:Ag ratio hit 153.  The "traditional" 16:1 ratio hasn't been in effect for nearly 200 years.  The Comstock Lode was the first (of many) blows to the old silver valuation.

That being said, the Au:Ag ratio is likely to fall significantly in the near term.  (Meaning the silver price will rise more rapidly than the gold price.)  Most silver production these days is a byproduct of other (base metal) mining.  As a slowing economy diminishes the demand for copper, lead, molybdenum, etc, silver production will fall along with it.  When this happens, along with increasing investment demand, the price of silver will shoot up, for a time.

It takes YEARS to bring new mining capacity on-line, and this will bear fruit for today's silver investor.  Will it hit at 16:1 ratio?  I don't know, but I'd rather sell too early than too late.  (By sell, I mean move into gold.)

Here's a cool chart: http://goldinfo.net/silver600.html

[Caleb]

My understanding of silver, (and I could be wrong, but this was my understanding anyway) is that there were several reasons for the deviation from the 16:1 ratio, but that several of these had been corrected

I am not a silver expert by any means. but I still think it is a good buy, relative to gold. As silver goes up with respect to gold, I will decrease the amount of silver that I buy, and increase the amount of gold. Right now, I'm buying in 75% silver, 25% gold.

[malcolm]

My understanding of silver, (and I could be wrong, but this was my understanding anyway) is that there were several reasons for the deviation from the 16:1 ratio, but that several of these had been corrected

Most of the deviation from 16:1 has been from technology.  Better extraction, smelting, refining and recover practices have made it easier to obtain silver.  We will see spikes in silver to 40:1 or maybe 30:1 (IMHO), but the 16:1 ratio is now a historical relic.  That does not, however, make it a bad asset to hold.  Silver will give you significant leverage to gold appreciation in the coming months.  Volatility is a bitch, however; you best keep your wits about you.  (And don't get too greedy; that will cost you.)

I am not a silver expert by any means. but I still think it is a good buy, relative to gold. As silver goes up with respect to gold, I will decrease the amount of silver that I buy, and increase the amount of gold. Right now, I'm buying in 75% silver, 25% gold.

I agree.  I'm not an expert, either.  Do you mean 75% by weight or by dollar cost average?  One downside of silver is storage cost.  Half a million dollars in gold can be fit into a safe deposit box. (They'll probably want to that box on the bottom shelf.)  That value of silver (even at 30:1 ratio) is quite a bit to store, and nigh-impossible to move discreetly.  Remember that privacy is valuable, especially where the spooks are involved.

[Caleb]

75% by dollar value. That's only roughly, though. right now, a quarter ounce of gold per thousand dollars spent.

I haven't found a perfect system for solving the storage issue. you are right that gold is easier to sock away discreetly.

[malcolm]

I haven't found a perfect system for solving the storage issue. you are right that gold is easier to sock away discreetly.

Do you own your home?  If so, the Midnight Gardener method isn't half bad.

[PattyLee loves dogs]

One thing that changed the silver ratio is that most silver is a byproduct of copper mining, which of course is driven by industry. I wouldn't expect the ratio to return to ancient levels.

[mackler]

Most of the deviation from 16:1 has been from technology.  Better extraction, smelting, refining and recover practices have made it easier to obtain silver.  We will see spikes in silver to 40:1 or maybe 30:1 (IMHO), but the 16:1 ratio is now a historical relic.  That does not, however, make it a bad asset to hold.  Silver will give you significant leverage to gold appreciation in the coming months.  Volatility is a bitch, however; you best keep your wits about you.  (And don't get too greedy; that will cost you.)

Another thing I've observed is that one major use of silver has been for photograph development.  With the advent of digital cameras that demand has gone down.

[Kat Kanning]

Gold $1025
Silver $21.00

[Puke]

I should be buying silver today. 

[Friday]

So I finally sat down and counted how many Morgan and Peace silver dollars are in the little bit of a third-generation coin collection that was handed down to me a few years back, and looked up the silver percentage, and the current price of silver, and did some math... and said "Holy Frijoles!!", danced a small jig, then shoved it all in my safe, shut and locked it. 

Is anyone else freaking out about the state of the economy? It's driving me crazy.  Not that I want    , but the waiting is just making me crazy   .  I just read Crash Proof by Peter Schiff, and am now reading The Collapse of the Dollar and How to Profit From It.  I hate not knowing if things will continue much as they have been for a year... or two... or five... or if tomorrow is the day that something Black Tuesdayish will happen.   

[PattyLee loves dogs]

and looked up the silver percentage, and the current price of silver,

There's some numismatic value there too, maybe quite a bit if they are in good enough condition. Might be worth more than the silver content.

Is anyone else freaking out about the state of the economy?

Considering how inherently unstable it is, most people are freakishly calm. I blame Prozac and the other serotonin-stimulators. (First S in SSRI is for "Selective"... yeah right).

or if tomorrow is the day that something Black Tuesdayish will happen.

All we can do is be really diversified... don't have all your assets in one currency. Or even one metal... you can ask the Chinese how that worked out:
http://www.lewrockwell.com/orig5/walker3.html

It's very easy to diversify today... BWX will spread your currency risk among all the other worthless fiat currencies. QID, SKF, SDS, etc. will even let you hedge against the market going down.

Of course there are commodity ETFs too... but I think most of them are a little speculative now.