Written by Takeshi Yashima Friday, 15 April 2011 18:02 Investment Analysis:gold silver ratio Last week, I use Dow and Gold ratio to see if precious metal investment is currently agood investment. In this time, I will introduceanother measuring stick Iconsistentlyuse to evaluate the investment. This is called gold silver ratio. This ratio measures how many ounce of silvers one ounce ofgold can buy. For example, current price of silveris $43 per ounceand current price of gold is $1487 per ounce. In this situation, gold silver ratio is approximately 35 (Price of gold devided by price of silver to obtain how many ounces of silver gold can buy). Histrically, gold silver ratio is 16. In 1980s, price of the silver topped $52.50 and price of the gold was $850. Therefore, gold to silver ratio back to 1980s (Top of the market) was approximately 16. However, as you see above, current ratio is 35. Meaning that price of silver is still undervalued compared to histrical average of gold silver ratio. When I bought silver back in 2009, gold silver ratio was 65. Back in 2008 and 2009, price of silver was extremelyundervalued against price ofgold. Moreover, almost 2.5 billion ounces of silver existed on 1980s. But,silver is now almost virtuallygone because silver is industrial precious metals that used to manufacture all sort of goods, such as computer chip, CDs and so on while gold hasbeen held by many governments and investors (Therefore, quantity of goldis almost no change from 1980s).In other words,silver is now rarer than gold.Current price of silver isstill cheaper than thethat of silver during top of the market on 1980s. Yet, current quantity of available silver ismuchsmaller quantitythanthat of currentavailable gold. Considering those facts, it is fully possible that gold silver ratio maydecline further than histrical average of 16 (even 10, 9...). In such situation, how muchwillprice of silver be? In my opinion, price of silver will easily exceed previous histrical high price of $52.50 on 1980s.Silver has huge upside potential. Gold to silver ratio is one of the dataI use to track the investment as I said on the beginning. There are many more data and facts I amusing every day. I will write what kind of information I use to make investment decision in the future blog. So stay tune! Related Blogs and Articles Dow Gold Ratio explained How to preserve and increase your wealth at the same time The Reason Got Me Started Why I Invest in Silver Main Factors Affecting the Price of Commodities Tweet digg Read more: http://www.takeshiyashima.com/us/my-blog/65/231-gold-silver-ratio#ixzz2IV22rxJH
Eric Sprott: Why Are Investors Buying 50 Times More Physical Silver Than Gold? Submitted by Tyler Durden on 12/24/2012 16:37 -0500 Commodity Futures Trading Commission Eric Sprott Exchange Traded Fund India Precious Metals World Gold Council By Eric Sprott Why are (Smart) Investors Buying 50 Times More Physical Silver than Gold? As long-time students of precious metals investing, there are certain things we understand. One is that, historically, the availability ratio of silver to gold has had a direct influence on the price of the metals. The current availability ratio of physical silver to gold for investment purposes is approximately 3:1. So, why is it that investors are allocating their dollars to silver at a much higher ratio? What is it that these “smart” investors understand? Let’s have a look at the numbers and see if it’s time for investors to do as a wise man once said and “follow the money.” Average annual gold mine production is approximately 80 million ounces, which together with an estimated average 50million ounces of annual recycled gold, totals around 130 million ounces available per year. In comparison, annual mined silver production has averaged around 750 million ounces, while recycled silver is estimated at 250million ounces per year, which adds up to approximately 1 billion ounces. Using this data, there is roughly 8times more silver available to buy than there is gold. However, not all gold and silver is available for investment purposes, due to their use in industrial applications. It is estimated that for investment purposes (jewelry, bars and coins), the annual availability of gold is roughly 120 million ounces, and of silver it is 350 million ounces. Therefore, the ratio of physical silver availability to gold availability is 350/120, or ~3:1. 1 Now, let’s examine how investors are allocating their investments between gold and silver. The data below is from the US Mint showing gold and silver sales in ounces: Source: US Mint ( www.usmint.gov ) As you can see, investors are choosing to buy silver at a ratio to gold that is well above what is available. This uptrend doesn’t show any signs of slowing either. The ratio of the physical silver to gold is both rising and extraordinarily above the availability ratio of 3:1. We can also use other data such as the most recent issues of the Sprott Physical Gold and Silver Trusts. The last Gold Trust issue in September 2012 raised US$393 million and the last Silver Trust issue raised US$310 million. On the basis of prices for each metal at the time of issue, we could purchase ~213 thousand ounces of gold and ~9.1 million ounces of silver. This represents a purchase ratio of 43:1. If we examine ETF holdings in both gold and silver, we note that in the period from 2007 to 2012, the increase in silver holdings amounted to 12,000 tonnes, compared to 1,200 tonnes of gold – meaning, investors purchased ten times more silver than gold. These are only three factual data points to consider, but there are other indications that silver investment demand is way out of line with availability. Our favourite question to the bullion dealers we meet, is to ask the ratio of their dollar sales in gold versus silver. The answer is that dollar sales are equal, which means that physical silver sales relative to gold are greater than 50:1. A recent news headline on Mineweb read, “Silver Sales to Outshine Gold in India. 2 ” It went on to quote a bullion dealer that “investors and jewelry lovers prefer silver jewelry these days.” As the largest importer of gold in the world, it would be impossible for India to purchase an equivalent amount of silver, as it would require more than one billion ounces, essentially more than the current annual mine production. While these last two confirmations of silver demand are anecdotal, the statistics from the US Mint, the ETFs, and our Physical Trust issues, are factual. For the time being, the silver price is essentially set in the paper market where the daily average trade on the Comex is approximately 300 million ounces. An outrageous number when you compare it to the daily mine production of about 2 million ounces. As Bart Chilton, Commissioner of the Commodity Futures Trading Commission stated on October 26, 2010, “I believe there have been repeated attempts to influence prices in silver markets. There have been fraudulent efforts to persuade and deviously control that price. Based on what I have been told and reviewed in publicly available documents, I believe violations to the Commodity Exchange Act have taken place in the silver market and any such violation of the law in this regard should be prosecuted.” 3 Which brings us back to the phrase “Follow the money.” In our view, it is almost inconceivable that investors would allocate as many dollars to silver as they would to gold, but that is what the data shows. The silver investment market is very small. While the dollar value of gold in the world approaches $9 trillion, the value of silver in the forms of jewelry, coins, bars and silverware is estimated at around $150 billion (5 billion ounces at $30 per ounce). This is a ratio of 60:1 in dollar terms. 4 How long can investors continue to buy silver at the current ratios when the availability for investment is only 3:1? We are surprised that the price of silver has remained at such a depressed level compared to gold. Historically, the price ratio between gold and silver has been 16:1, when both were currencies. Today the ratio is 55:1, so what are the numbers telling us? We believe this is one of those times when smart investors will be well rewarded to “Follow the money.” On behalf of all of us at Sprott, I wish you safe and happy Holidays and a prosperous New Year. P.S. – US Mint Sold Out of Silver Eagle Bullion Coins Until January 7, 2013 The Mint recently informed authorized purchasers that all remaining inventories of 2012-dated Silver Eagle bullion coins had sold out and no additional coins would be struck. Since the 2013-dated coins will not be available to order until January 7, 2013, this leaves a three week void for the Mint’s most popular bullion offering. 1 Sources: Gold data is from World Gold Council www.gold.org , and silver data is from Silver Institute, http://www.silverinstitute.org/site/supply-demand/ 2 Source: Mineweb.com 3 Source: Bloomberg: http://mobile.bloomberg.com/news/2010-10-26/silver-market-faced-fraudulent-efforts-to-control-price-chilton-says.html 4 Sources: Gold data is from World Gold Council, silver data is from United States Geological Survey (USGS) and Silver Institute. Average: 5 Your rating: None Average: 5 ( 25 votes) Tweet Login or register to post comments 19438 reads Printer-friendly version Send to friend
标签: Silver经管大学堂：名校名师名课
京公网安备 11010802022788号
论坛法律顾问：王进律师
知识产权保护声明
免责及隐私声明
