Saturday , 10 December 2016


Now’s the Time To Trade In Your Gold For Silver – Here’s Why

If you’re a speculator in precious metals, now may be a good time to fine silver fine goldconsider trading in some gold for silver. Here’s why.

The following article by Simon Black (sovereignman.com) is presented in an edited ([ ]) and abridged (…) format to provide a fast & easy read.

…Given that gold is still traditionally seen as a safe haven the gold:silver ratio tends to rise dramatically in times of crisis, panic, and economic slowdown. For example:

  • just prior to World War II as Hitler rolled into Poland, the gold/silver ratio hit 98:1;
  • in January 1991 as the first Gulf War kicked off, the ratio once again reached 100:1, twice its normal level of about 50:1 throughout the 20th century;
  • in nearly every single major recession and panic of the last century:
    • the crash of 1987;
    • the Dot-Com bust in the late 1990;
    • the 2008 financial crisis there was a sharp rise in the gold/silver ratio which invariably led to a gold/silver ratio in the 70s or higher. In 2008, in fact, the gold/silver ratio surged from below 50 to a high of roughly 84 in just two months.
  • We’re seeing another major increase once again. Right now as I write this, the gold/silver ratio is 81.7, nearly as high as the peak of the 2008 financial crisis. This isn’t normal.

In modern history, the gold/silver ratio has only been this high three other times, all periods of extreme turmoil—the 2008 crisis, Gulf War, and World War II – which suggests that something is seriously wrong or, at least, that people perceive something is seriously wrong. There are many macroeconomic and financial indicators suggesting that a recession is looming, if not an all-out crisis.

  • In the U.S., manufacturing data show that the country is already in recession;
  • default rates are rising; corporate defaults in the U.S. are actually higher now than when Lehman Brothers went bankrupt back in 2008…putting a ton of pressure on banks, whose stock prices are tanking worldwide as they scramble to reinforce their balance sheets against losses….

Good times never last forever, especially with governments and central banks engineering artificial prosperity by going into debt and printing money. These tactics destroy a financial system, and the cracks are visibly expanding so, while the gold/silver ratio isn’t any kind of smoking gun, it is an obvious symptom alongside many, many others. Now, the ratio may certainly go even higher in the event of a major banking or financial crisis. We may see it touch 100 again.

[The above being said, however,] it is reasonable to expect that someday the gold/silver ratio will eventually fall [from the current 80 or so] to a more historic norm of 55 (remember, it was as low as 30 in 2011)…which means that in the future you’ll be able to trade the 80 ounces of silver you acquired today for 1.45 ounces of gold…The final result is that, in gold terms, you earn a 45% “profit”. Essentially you end up with 45% more gold than you started with today.

The bottom line is that if you’re a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

Disclosure: The original article by Simon Black (sovereignman.com)  was edited ([ ]) and abridged (…) by the editorial team at munKNEE.com (Your Key to Making Money!) to provide you with a fast and easy read. “Follow the munKNEE” on Facebook, on Twitter or via our FREE bi-weekly Market Intelligence Report newsletter (see sample here , sign up in top right hand corner)

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2.

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7 comments

  1. I don’t buy the argument. Everyone wanting you to buy silver has been telling you this for years. More people can buy silver because it is much cheaper than gold. That is why they are recommending you buy silver. Their is more profit for the seller in selling silver (especially when the price of gold is high) because more people can buy silver because it it much cheaper than gold. I have lost in the silver market for years and the silver price has not gone up. They say every year silver will be back up to 30 to 50 dollars an ounce before the end of the year. It hasn’t happened in in recent history. If the gold and silver ratio goes down in the current environment, Gold will be cheaper, but Silver will still be selling at about 15 dollars an ounce. (I want the experts to tell me that the decline in the Gold and Silver ratio is a guarantee that the price of silver will go up and explain this concept to me). Yes, you will be able to buy more gold with the silver you own, but the gold will be worth a lot less and you have not gained anything. Don’t get me wrong, I would have some silver and gold stashed away for an emergency. However, do not put all your money in one basket. Cheers

    • I am sorry, I guess the point of the article is telling you to sell your gold and buy more silver. So sellers will make a commission on buying your Gold (below spot), and selling you Silver at a premium above spot. Win – win for the Seller.

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      Buyer beware!

  2. The only fly in the ointment is if the current “President” writes a E O (Executive Order) that makes both GOLD and SILVER Illegal to own and must be turned in or face a long jail term . During the last great depression then president F D R did that to gold and sent Federal agents to all banks to open all safe deposit boxes and steal all the gold they found , with out any compensation what so ever !! The moral to that story is , Safe deposit boxes are NOT SAFE ! So what are we to do ? I will bet a dollar to a donut that this ” President ” we have now will do the same to us and we will be worse off for it. Any way this is sliced we are going to loose on this next crash.