Gold to Silver ratio: Why It Makes Sense To Own Bullion

gold silver ratio historyGold to Silver ratio

Updated Dec 2020

Before we get to that, let’s consider why it makes sense to own some Bullion.  We live in a world where the main driving force behind this illusory economic recovery is hot money and fraudulent data manipulation.  According to Government stats, inflation is nonexistent. However, anyone with a grain of grey matter understands this is not the case.  Rents, education and medical costs are soaring, and salaries drop when inflation is factored in. Simply put, you are working more and more for less and less.  This is not the American dream, but it is more in line with one of the worst scenes from a scary movie.

The primary driver, however, is hot money; cut this supply, and the economic recovery ends. Central bankers are aware of this, so they are embracing negative rates. Negative rates are the only way to maintain the illusion that all is well. But, the million-dollar question is for how long?   Gold and Silver bullion should be considered insurance against a future financial disaster. We will experience another catastrophe sooner or later.

Gold Bullion Should be Viewed As an Insurance Policy

We are not advocating that you load up on bullion as the precious metals sector. It never makes sense to put all your eggs into one basket. We are talking about taking insurance against another financial crisis; that has the potential to be larger than the 2008 financial crisis.  You purchase Insurance not because you know something bad is going to happen, but if something terrible happens, you know you are covered. So while many will focus on the Gold to Silver ratio, that should be a secondary consideration. The main factor is that you will have a hedge if something goes wrong.

Bitcoin vs Gold

For those with extra money that is not being put to use and patience, you can use strong pullbacks to add to your bullion position. We tend to favour Silver more than Gold as the gains on a percentage basis will be far more significant on Silver than Gold.  Today’s investors in the era of hot money are looking for fast gains, and Gold cannot compete with bitcoin in that arena, at least for now.  Bitcoin has outperformed Gold by a factor of 10 and will continue until that market blows up.

Gold still has to overcome 1800, and until it manages to close the quarter above this level, it won’t be in any position to crack the $2000 level.  For now, Gold has to close above $1500 on a monthly basis. If it can achieve that milestone, it can test the 1800 ranges with an overshoot as high as 1910.

If there is a feeding frenzy, and there usually is, our ideal high-end target for gold is $5,000.  Those issuing targets of $20,000 and higher need to get off their medication, for they are simply leading novice investors astray.

Gold to Silver ratio Chart

Gold silver ratio history chart

The best time to get into Silver is when the ratio is at an extreme value, as is the case presently. The last time that occurred was in 2016. Looking at the Gold silver ratio history does not tell you if it’s an excellent time to enter the precious metals sector. It only informs one when getting into silver makes for a better investment than buying Gold as the percentage returns will be higher for those who purchase.

Learn how to invest in the markets and make sure you don’t end up at the mercy of some Corporation to pay your pension or government-controlled social security.  Put up to 5%-10% of your funds into bullion, but do it gradually and use strong pullbacks to establish positions. Once the trend in Gold turns bullish, you can increase your stake to 20%.


Gold Outlook Update Aug 2019

We have a bullish MACD crossover on the monthly charts, and the trend is mildly positive for the first time in years. Now if Gold manages to close above 1500, then a test of the 1800 ranges with a possible overshoot to 1920 is likely. Silver is a laggard and will only start to take off after the action begins to heat up in the Gold markets, but Silver is expected to outperform Gold Bullion in percentage terms.  The pattern (currently) is stronger for Bitcoin than for Gold; however, things could change fast. In a short time, though, Bitcoin investors should consider waiting for Bitcoin to let out some steam before deploying new capital.

Other Articles Of Interest:

1st World Corporate America & Third World Regular America (27 May)

Negative rates will fuel the biggest Bull Market rally in History (25 May)

Millennials being squeezed out of Housing Market (20 May)

The problem is Fractional Reserve Banking-we don’t need Gold Standard (15 May)

BBC Global 30 Index Signals Dow Industrial Index will trend higher (11 May)

Stock Market Bull not ready to buckle (4 May)

Fear mongers are parasites that profit from your fear (2 May)

Gold-silver ratio history; Buy when the masses are not paying attention to bullion