Posted on 12/28/2010 2:07:47 PM PST by mikelets456
Whats the deal with Taxes?
I’m about to make some adjustments to my trading account. I thought I knew about the cycles in silver, but this trick may be one I missed.
Quick story:
A few years ago our car went TU. We needed another right away but didn’t have the money on hand or in the bank. I suggested to the seller (a friend of mine) that we’d make up the last $1000 with silver rounds valued at $7 per ounce. He refused so I had to sell the coins downtown (for about the same price) and give the FRNs to him. I pointed out the price of silver to him this morning.
It’s knda fun to watch a grown man trying to kick his own butt.
More for you to chew on to see the facts about the ratio:
Recent decades:
http://www.gold-eagle.com/charts/gegsr.html
Recent years:
http://stockcharts.com/h-sc/ui?s=$GOLD:$SILVER&p=W&b=5&g=0&id=p32100934640
Recent centuries:
http://lib.store.yahoo.net/lib/rarecoins/650-Silver-Prices.gif
I’ve seen you post that same thing over and over.
Under the Coinage Act of 1792, here’s the deal:
A gold eagle (ten dollars) contains 16 gr of pure gold.
That makes one dollar the equivalent of 1.6 gr pure gold.
A dollar contains 24.1 gr of pure silver
Therefore, 24.1 gr of silver is the equivalent of 1.6 gr of gold
24.1 divided by 1.6 gives a ratio of 15.06 to one
Which is close to their relative rarity in the Earths crust.
Where do you invest in silver?
Selling prescious metals creates a large tax event, so it depends on whether you want the income this year, or to put it off to next year.
I’m no expert, but I’d say silver could go to $50 in the next year. If I’m right, then silver is a bargain now. Good for you in getting some under $20! I did too, then recently bought more at $27.
First, some refinement of terms.
Beelzebubba wrote:
I keep reading about a 16:1 ratio of Gold to Silver on this planet.
Those are really horse-and-buggy, even sailing ship numbers.
The ratio hasn’t dropped much below 50:1 for generations.
mikelets456's ratio, 16:1 is correct for what comes out of the ground. For every ounce of gold that is mined and processed between 16 an 17 ounces of silver are mined and processed. That ratio is fairly steady and doesn't change much.
Your 50:1 ratio is the price ratio, not the scarcity ratio or weight processed ratio.
The price ratio has been quite volatile over time. During the big precious metals peak in 1980, there was a point where the gold:silver price ratio was about 15:1. In the past 10 years, it's been as high as about 80:1 at times, and as low as 50:1. It's a bit under 50:1 today.
Also, historically over the last 40 years or so, that price ratio tightens when prices rise. Generally, when prices go up, silver goes up more. There are some exceptions, and some of the price movements aren't quite synchronized. In the current run up, silver has seemed to lag behind gold rather than rising at the same time.
First, know what it's worth.
MalachiFourSix wrote:
Where do you invest in silver?
For ounces, this is a good reference (click the chart to go to a web page you can bookmark):
For US 90% silver coins, this page is a better resource: Silver Coin Melt Values (from coinflation.com).
Once you know the price to bid. Try these links.
Don't be afraid of the term "junk coins." That means the dates might not be readable, the coins may be worn and or such common dates that they have no numismatic value. Those are the coins that sell for their silver value only.
My local dealer bought some onzas from me last week for $29.25 -- less than a dime under spot. He said he would buy Englehards for $.50 under spot.
During the big precious metals peak in 1980, there was a point where the gold:silver price ratio was about 15:1
I invite you to make a prediction something like mine:
Gold will rise to a peak of about $4000 in the next five years, and settle to about $2500.
The gold:silver ratio will not drop below 20, nor spend much time below 30.
I have my eye on platinum. When gold equals platinum, it’s time to trade some gold for platinum, because platinum rarely drops that low (it just barely did in late 2008).
Historic, note last 25 years:
http://www.sharelynx.com/charts/AuPL.gif
Recent:
http://stockcharts.com/h-sc/ui?s=$GOLD:$PLAT&p=W&b=5&g=0&id=p27873949797
Large amounts (>~$10k) get great prices at tulving.com, nwtmint, and such.
Small amounts, buy on ebay or pay a premium to nwtmint. Or get a club of pals to do a group buy (but watch out for privacy and security issues when your friends blab).
Honestly, I think some clever Freeper should retail to fellow freepers for half the markup nwtmint charges on small orders, and have a nice little business.
If you want to have as an investment, not crisis insurance, buy SLV ETF if you have faith in the financial professionals making those promises in exchange for your money.
Is that you, Kemosabe?
My local dealer... said he would buy Englehards for $.50 under spot.
Does anyone have any feedback - bad or good - on goldline?
True, but it was also significantly after I bought my last horse and buggy, and long after my stint as a deckhand on a four masted bark (your estimate of when that ratio was last seen).
Beelzebubba wrote:
True, but that anomalous time is hardly something to hang your hat on.
In 1930, the ratio (then set by law) was $20/ounce gold, $1.38/ounce silver, for a ratio of about 14.5:1. In 1964, the end of the "silver coin" era, it was a ratio of 25:1 ($35/ounce gold, still $1.38/ounce silver).
You're the one who was saying that 1964 was the era of horses and buggies and/or sailing ships. My point was that even since we've been off the gold standard, the ratio has been significantly lower than the 50:1 we see this past month. And more often, when the ratio is tighter, it's when prices are high.
bttt
My charts above would seem to disagree.
silver bunp
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