Time To Swap Silver for Gold

April 20, 2011 | By | Reply More

Gold IngotThe gold silver ratio is currently around 37. This means that one ounce of gold will buy thirty seven ounces of silver.

Historically the ratio has been between 50 and 55. When gold and silver began their most recent climb we were looking at a ratio of between 60 and 70 but then silver’s greater volatility engaged and the ratio has progressively fallen.
When the ratio was in the forties it was very tempting to swap silver for gold but such was the power of the silver upward trend we resisted the temptation to swap our silver for gold.

Silver’s Smaller Market Spells Greater Volatility

Silver is a much smaller market than gold as well as being usually twice as volatile but it has a significant influence on the gold price.

This situation was not lost on those that seeked, and still do, to keep the gold price down or at least slow its upward path. We are of course talking about the US Fed and its international banking supporters and their governments.

The outstanding thing that they have in common is that their currencies are getting progressively less valuable as they churn out more and more paper money without the economies and hard assets to sustain their value.

Gold Now Leads Economic Supremacy

Gold has been the principal store of wealth for millenia and, despite a temporary set back when President Nixon took the US off the gold standard, followed by its allies, it is now back in the forefront of the battle for economic supremacy.

Manipulating the price of silver was, for well over a year, probably even more than two, the preferred way that the Fed and others had of holding back the price of gold as it was less costly than trading gold and  still had the desired effect, at least to a certain degree.

Manipulating the Gold Price No Longer Working

As we all now know gold is going from strength to strength as the manipulative attempts to control the price are seen to be so abjectly ineffective.

In our opinion silver still has a considerable amount of bullish impulse and will rise accordingly. However what we expect to see over the coming months is that gold will show an increasingly upward momentum and will very shortly start to outperform silver percentage wise.

We also expect that silver will suffer from more significant pullbacks as it trends upwards and may well be adversely influenced if, or more probably when, the second leg of this recession kicks in. The metal is a major player in high tech, medical and other industrial uses.

Threat of Hyperinflation

We believe that gold will continue to increase in value if, for no other reason than that the depreciating value of so many currencies, with the US dollar the leader of the pack, is more than likely to leading to hyperinflation in the Western economies on an awsome scale.

Time to Swap Silver for Gold?

This leads us to the conclusion that swapping your silver holdings for gold may turn out to be a more probable profitable trade in the longer term than holding on to the white metal that has served us so well in the past.

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Category: Gold

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