Posted on 05/07/2011 7:46:36 AM PDT by blam
Predictions Of The Gold-Silver Ratio
By Addison Wiggin
05/06/11 Baltimore, Maryland – Today(Friday), traders are celebrating that the U.S. economy added the most jobs in nearly a year. Or so they’re led to believe. Let’s examine the payroll data first:
The economy supposedly added 244,000 jobs in April. The private sector added 268,000 jobs; government cut 24,000 However, 175,000 of those new jobs can be attributed to the BLS’ “birth/death model” – in which the economists guess at the numbers based on the launch of new businesses and the demise of old ones. In other words, nearly three-quarters of these new jobs are a statistical invention. And most of the rest are the 62,000 people McDonald’s hired in a one-day job fair publicity stunt.
The separate household survey is nothing to write home about, however:
U-3 unemployment, the number the media latch onto, rose to from 8.8% to 9.0% U-6, the more honest figure that includes people who’ve given up looking for work and part-timers who want to work full-time, rose from 15.7% to 15.9%. As always in these situations, we turn to the two figures the statisticians can’t game:
The red line is the percentage of the working-age population in the labor force. The black line is the employment rate of the overall population. Both lines are stuck at the same level they were when Hollywood inflicted the first Police Academy movie on an unsuspecting populace and Paul Volcker was getting kudos for “slaying inflation.”
But as long as the narrative is that job growth is on track – whew, what a turnaround in just 24 hours – we will get results like this…
The major stock indexes have recovered most of yesterday’s losses. The S&P is back above the key level of 1,344 Gold is within $5 of $1,500 again, and silver pushed past $36 Copper, which fell below $4 a pound yesterday, is back above it today Crude oil is only 30 cents away from $100 again. After this correction, the gold-silver ratio – very simply, the dollar price of gold divided by the dollar price of silver – is back to 41 this morning. One week ago today, when the metals were at record highs, the ratio was 32.
This number is important in terms of the long-term trend. A few years ago, Tennessee bullion dealer Franklin Sanders assembled this chart going back to the Coinage Act of 1792. We’ve updated it to the present day:
In the century since the creation of the Federal Reserve, the ratio’s been all over the place. The key is that it’s bottomed at or around 16 three times in the last century – 1919, 1968 and 1980.
Sanders is among many who believe long term, it’s headed back toward 16. Canadian fund genius Eric Sprott is another. Sixteen was the ratio for centuries before massive silver discoveries in the Americas in the 1800s.
With gold at $1,500 today, a 16:1 gold-silver ratio implies $94 silver. That’s a compelling case for silver… and with the ratio reverting for the moment above 40, silver’s on sale.
Silver at 36 is a screaming bargain. It might get down to 30, but only before bouncing to near 100.
I think gold will be at 2,000 and silver at 100 inside of a year.
This pullback was healthy. The robber barrons like Soros were manipulating much like the Hunts were in 1980. Silver to me is not an investment, it’s security.
Exactly.
You need silver to keep the werewolves in check.
Nothing else really works.
So, where’s the red line in the first graphic?
Ive aways viewed it as an insurance policy..the money of last resort...
But I must admit...Its turned into one hell of an investment through the years!....Doing better then my stocks..
The stores that sit closed down and empty in my neck of the woods are not opening. That speaks volumes.
The line of goods my local grocery store used to carry, and downsized greatly, ending the wide variety of cheeses, cold cuts etc, has not come back.
The cost of one loaf of bread!
Coffee prices....
The price of a pound of bacon...
Gas prices...
Ham prices in my area are more than doubled and that’s while on sale.
Even the price of seed to put in the garden!
The number of unemployed on my street, alone...
They can keep the propaganda up, they can manipulate the numbers all they want. But the concrete proof still stands.
Empty stores, houses unable to sell, food prices, gas prices...
The rest of it just the media campaigning on Obama’s behalf.
Just to add some thought to the question.....
QUESTION FOR ALL: How many ounces of mined physical silver are in existence today as compared to gold???
Do your own DD !!
What would it be?
“QUESTION FOR ALL: How many ounces of mined physical silver are in existence today as compared to gold???”
LET ME RE-PHRASE THE QUESTION:
Seeing how everything electronic has silver in it, how many millions of Oz’s have been thrown into the dumps over the last 6-7 decades because it was not cost effective to recover it like gold???
George Soros manipulated silver.
You are 100% correct.
One cost-effective area of silver recovery on an industrial scale was the photo processing industry. Mostly gone now, of course.
but I'll give u a strong hint...almost All the gold that has ever been mined is still in physical existence....All of the silver that has ever been mined isn't....(silver being an industrial commodity )
If I were going to do Ratios....Id start with the answer to my original question...then Id move on to the Law of supply and demand....
but again...as to any financial investment...Do your own DD
We just can’t get parts for things. We had some things on order for 6 months. Now I understand that the old on time delivery is turning into on time manufacturing. Pretty much everything is a special order and even though they advertise, they don’t even make it until you order it.
Bearings, sprockets, tires, chemicals, things that were always in stock have to be special ordered and yep, I get to pay the shipping too.
I use online a lot because everyone is too timid to invest in inventory.
I’m always concerned when I hear so many people trying to justify the price of something.
Just like the recent bubble in real estate, people came up with very compelling arguments as to why real estate would continue to go up in price. People who warned about a possible bubbly were ridiculed by the know it alls...and we’ve seen the results.
I believe if you have to “talk” yourself into believing something, it may be trouble.
The fair price of any commodity is the price to produce it. Anything beyond that is supply & demand and speculation.
I’ve read numerous studies suggesting the cost to produce silver is about $5.50 to $7/oz.
The only supply & demand pressure I see is from a lot of people believing that its’ going to go up, for all their geo-political reasons, thus the rise in silver became a self-fullfilling prophesy.
But when it drops, as it has recently, we are now getting once again, all the reasons why it’s going to go back up.
Sounds like a lot of “hoping” & “wishing”, aka “speculation.
Anyone can come up with lots of conspiracy theories to try and justify the price; example the dollar is being debased (it is), or it’s all you will have when armageddon hits, etc.
But keep in mind, the people floating these rumors and ideas, may have an agenda. Perhaps they want out of silver, as in this example, and need to “pump it” so they can create the liquidity to “dump it”.
Good luck all.
I’ve been buying silver Eagles as my reserve currency, but recently I bought a pound of old dimes (90% silver.) I figure that the time may come that one dime will buy a day’s food.
Soros and Carlos Slim. And since we’re hearing about them dumping their futures this week, assume they did it last week... at the peak... before the five CME margin hikes.
I guess when we hear about them taking delivery of physical, we’ll know we’re one week past the bottom.
Good plan.
Old silver coins may save your life. (I bought old US silver dollars (slicks) for $11.50-$12.50 each.
Also...I have many of these:
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