PMs: Gold vs. Silver

[Henry Rogue]

http://en.wikipedia.org/wiki/Coinage_Act_of_1834
Its not a freemarket ratio, its a govt mandated ratio and thus meaningless.

This^^

The important point being that they both have their own supply and demand factors determining their price. There is no "natural ratio" in price terms.

Correct. When Both are used as money and are tied to each other with a fixed ratio, that is when Gresham's law takes effect.

 

[Henry Rogue]

I wouldn't trust a piece of paper that says I own gold or silver anymore than I trust fiat.

 

[Zippyjuan]

Bring this thread back up. Silver and the PMs got pounded this week. As did my portfolio. Can someone explain to me how we can continue to print money and raise the debt limit, yet gold and silver are not blowing up?

Nothing goes up forever. Metals have had a huge run from about 2004 until 2011 and got way over-priced relative to other things. I think they still have quite a ways to go down.

 

[Smaulgld]

I think your ratio would be "more honest" if you compared total ounces of US Mint silver vs. gold. Silver eagles are only sold in 1 ozt. coins, but the US Mint also sells 5 ozt. America the Beautiful coins. The US Mint also sells Gold Eagles in several weights. If you are presenting a ratio that purports to show market demand for silver vs. gold, you should be including all the ounces sold, not just sales of 1 ozt coins. $.02

I considered it but the ratio would change much as the bulk of the gold and silver is sold in the one ounce increments
When I update the current ratio at the end of the month I will include all gold and silver sales including the gold buffalo coins.
What is astonishing is the massive increase in silver sales this year vs gold and especially the past few months

 

[Zippyjuan]

What the US Mint sells doesn't have much of an impact on the global price of gold or silver. Their percent of the market is tiny.

News from today: http://www.reuters.com/article/2013/09/16/markets-precious-idUSL3N0HC05Y20130916

SINGAPORE, Sept 16 (Reuters) - Gold slipped on Monday,
reversing early gains as growing conviction the U.S. Federal
Reserve would decide to roll back its stimulus from this month
dented the metal's appeal as a hedge against inflation.
The consensus is that the Fed will initially reduce its bond
purchases, now $85 billion a month, by $10 billion or perhaps
$15 billion and will announce the taper to its quantitative
easing (QE) after its Sept. 17-18 meeting.
Spot gold, which posted its steepest weekly drop in
more than two months last week, had slipped 0.1 percent to
$1,324.61 an ounce by 0650 GMT after hitting an intraday high of
$1,334.46. Silver fell nearly 2 percent.
News that former Treasury Secretary Lawrence Summers had
dropped out of the race to head the Fed boosted bullion prices
briefly as he is seen as more hawkish than the other main
contender Janet Yellen. Markets however do not expect this to
derail the near-term tapering process.
"Yellen is perceived to be more dovish than Summers," said
Barnabas Gan, an analyst at OCBC Bank in Singapore. "It seems
that there may be more resistance in faster tapering of the QE
program if Yellen becomes the chairman," Gan said.
Gold has plunged about 20 percent this year on tapering
fears, after twelve straight annual gains.

INVESTOR SENTIMENT BEARISH
Easing geopolitical tensions in Syria also hurt gold's
safe-haven appeal on Monday.
The United States agreed to call off military action against
Syria under a deal with Russia to remove President Bashar
al-Assad's chemical weapons stockpile.
Hedge funds and money managers slashed bullish bets in
futures and options of the U.S. gold markets for the first time
in 5 weeks, pressured by easing tensions over Syria and
expectations that the Fed will begin to unwind its monetary
stimulus, a weekly report by the Commodity Futures Trading
Commission showed on Friday.
SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.66 percent to
911.12 tonnes on Friday -- its biggest decline since Aug. 1.

 

[pmbug]

@Zip - no, but it's in interesting indicator of US investor interest in physical metal.