“Gold/Silver Price Ratio Getting Silly Again”
Posted by Investment Rarities on January 12th 2012 in CFTC, Federal Reserve, General Economy, Gold, Monetary Policy, Short Sellers, Silver, U.S. Congress, Wall Street | 1 comment
As Sprott’s John Embry predicts that “silver will hit $100 in 12 to 24 months,” the current mid-50s gold/silver price ratio is deemed “utterly insane” by Bullion Bulls Canada‘s Jeff Nielson, in making the case that market manipulation has artificially inflated the ratio. He points out that “the long-term price ratio of gold versus silver (i.e. over roughly 5,000 years) has averaged approximately 15:1. This closely coincides with the ratio of the natural occurrence of these two elements in the Earth’s crust (approximately 17:1). Not only did this price ratio remain relatively constant over several millennia, but the fact that the price ratio so closely mirrors the rate of occurrence of the two metals shows that (in relative terms) our species has demonstrated a roughly equal preference for the two metals throughout recorded history.
These facts establish beyond any possible contradiction that over the medium or long term the price of silver must remain at close to a 15:1 ratio versus the price of gold. There is only one factor which could alter this arithmetic: if our preference toward the two metals changed. Has any such change in preferences occurred? Yes. Silver has become much more popular.”
Related Links:
MarketWatch: Gold ends at almost month-high on weak dollar, ECB
Wall St. Cheat Sheet: Gold heads higher as silver closes above $30
Trader Dan: Gold, silver and copper responding to low interest rate environment
Hard Assets Investor: Gold on cusp of upside breakout
Forbes: 5 reasons gold will rise in 2012
John Hathaway: Tocqueville Gold year-end investor letter – 2011
Bullion Vault: 2012: Bullish macro factors to drive gold rather than dollar
Mineweb: Is it the People’s Bank of China that is doing all the gold buying?
Daily Reckoning: Gold & silver coins: The nearest thing to a permanent thing
Bloomberg: Silver coin sales may signal bear-market end
SilverSeek: Has the Central Fund of Canada given us another silver buy signal?
Wall St. Cheat Sheet: Eric Sprott and Endeavour Silver: A match made in heaven?
The Deal: CFTC proposes Volcker Rule for proprietary trading
Matt Taibbi: Revolving door: From top futures regulator to top futures lobbyist
Bloomberg: Economists scoff at Obama, Romney job creation myths
Washington Post: Ron Paul is the most dangerous man in the Republican party
Bill Bonner: Careful steps to avoid a “dystopian future”
February 24th, 2012 at 7:59 am
[...] have a higher currency value than the gold component because of the outperformance as a result of the decline in the gold-silver ratio.”….more Share this:FacebookStumbleUponDiggRedditEmail Uncategorized ← [...]