What is going on with the Gold/Silver ratio?

[LargoWinch]

Silver never looked so good since the summer of 2008...time to buy?

Feb 04, 2010 19:42 NY Time
Gold/XAU Ratio 7.29
Gold/Silver Ratio 69.67
Gold/Platinum Ratio 0.71

[jtabeb]

Re: What is going on with the Gold/Silver ratio?

Silver never looked so good since the summer of 2008...time to buy?

Feb 04, 2010 19:42 NY Time
Gold/XAU Ratio 7.29
Gold/Silver Ratio 69.67
Gold/Platinum Ratio 0.71

Oh that?

That's just JPM and their position that is short 60% of the entire silver market.

That's all.

[LargoWinch]

Re: What is going on with the Gold/Silver ratio?

Oh that?

That's just JPM and their position that is short 60% of the entire silver market.

That's all.

JT, the more they short, the more I buy ;)
[I am testing APMEX for the 1st time today].

As bart and medved said so well: they cannot hold it forever...

and when "forever" comes, I am buying iTulipers a round to celebrate the mess we will be in...and yes Cognac will be allowed, if available of course. Sante!

[thisandthat.nowandth]

Re: What is going on with the Gold/Silver ratio?

Since this interesting snip from tonight's Midas has already been posted in the public domain , thought I would share it here. I doubt that Mexico Mike , aka: "Coach" , is a stranger to most itulipers. Emphasis mine.

Feb 4 , 2010

Mexico Mike…

Hi Bill!
Given recent history, I would suspect that the pending employment report is going to suck. In fact that sucking sound emanating from the entire economy is getting even harder to ignore these days, despite the mainstream commentary and cooked data that has been presented lately. When I saw the gold shares trending lower earlier this week, even as the metals and the DOW were in the green, I suspected we were in for another smackdown, and we are sure getting that today. This is looking like a pre-emptive strike on the PM sector ahead of some horrible job numbers.

I was pleased to see that Sprott is getting into the bullion ETF business, since I have the utmost respect for that group and believe they will be among the minority that are operating transparently and in line with the interests of their clients, ie. they are not going to lease the bullion out the back door as fast as they take the orders and money from their customers. But I wonder where they are going to get their bullion from? If the reports of delays and difficulties to secure contracted and fully paid bullion delivery are true, then it is possible they may just end up shut out and screwed by a delivery default.

It is worth noting that I have heard from several smaller producers lately that they are receiving offers to sell dore directly to private interests. Even very small producers have been contacted. I also know of two companies that have decided to forward sell part of their production directly to private investors instead of going to a bank for funding. I think these transactions are going to be part of the landscape for many players in the future. If in fact the futures market has become so compromised by scams and manipulation that buyers no longer trust the settlement process, and if in fact the financing window has been closed to smaller companies to get access to capital at reasonable rates and conditions, then it makes sense that the small producers may just begin selling their product directly to the buyers that want to own physical gold. That is the need that a futures market was supposed to be serving in the first place, before it became a casino for speculators and a den of thieves for manipulators and criminals. At the end of the day, producers still need to establish a fixed price for forward production, and consumers and buyers still need a reliable source of supply. If the COMEX has become corrupt and unreliable, then buyers will go elsewhere. The reports I have heard in the field seem to suggest this is going on right now.

I would also point out that the Chinese bullion market is sure to grow, and the state has been supporting bullion ownership. This is based on real gold and silver, and not paper bullion. Clueless western speculators and funds may buy and sell the paper futures until the scam collapses, but real bullion demand is going to continue nonetheless from emerging trading centers in Asia and the mid-east. Add in the real bullion demand flowing through reputable funds like Sprott and the Central Fund of Canada, and you have even further pressure put on the declining world gold production to meet this demand. As you have pointed out for many years, it will eventually be the physical market that collapses the futures scam. Assuming that sovereign funds are withdrawing their bullion from the western vaults, and new production is being called away by private interests and legitimate bullion exchanges, then the ability of the COMEX and LME to continue playing with paper futures is drawing to an end. Delayed delivery, incomplete accounting and reporting of inventory, questionable grade and purity of bullion, and now a huge overhang of forward sold paper that is a multiple of the physical gold available to back it, all suggests that the paper fraud is in danger of collapse.

I wonder if all of the participants that end up with worthless paper will face the criticism by claiming they had no way to know or see it coming? Since that same excuse seems to be working fine in the wake of the housing bubble collapse, I guess this is the preferred plan for anyone that fails to do their homework or do reasonable investigation.
The people that have been calling us conspiracy nuts with tinfoil hats as we try to illuminate what is going on will then claim they had no way to see it coming when the wheels fall off. Fishing fleets will continue on until the last fish is gone before they acknowledge a problem. I guess it will take the drawdown of physical bullion in inventory down to zero before anyone notices that something is amiss. The more things change the more they stay the same.
Cheers!
MexicoMike

By the way, as I was typing out this email, my latest 100-oz bar of silver arrived by courier. Gold and silver are getting crushed in the market today, as more paper is dumped on clueless specs. I have another shiny, solid bar of silver in hand and no leverage whatsoever to phony paper contracts or ETFs, and not a care in the world.

-Joaquin- (Le Met subscriber)

[Chris]

Re: What is going on with the Gold/Silver ratio?

Oh that?

That's just JPM and their position that is short 60% of the entire silver market.

That's all.

Here is another thing I don't understand. How can JPM be short 60% of the silver market? Surely they can't take on a prop trade like that and so this 60% must represent the positions for their clients - the producers, non? A much less sinister proposition and therefore no use in forecasting the silver price.

[*T*]

Re: What is going on with the Gold/Silver ratio?

Silver never looked so good since the summer of 2008...time to buy?

Funny you should post that now... I just bought my first silver a couple of minutes ago. I think the ratio will get more favourable to buy silver soon. I'll be trading between silver and gold. I've been 'jtabebbed up' for some years now, never wanted to sell any gold, but am happy to swap for silver at the right price. BV now do silver, so it's become rather more convenient for me. If only they did platinum.

[bart]

Re: What is going on with the Gold/Silver ratio?

May be helpful to some:

[grapejelly]

Re: What is going on with the Gold/Silver ratio?

silver's fortunes are more tied to discounting the future economic activity. Silver's big role is as an industrial metal, except during strong upmoves in the gold market when silver usually lags, then rockets past gold.

Right now, investors are realizing that the economy is entering another downleg and that is why silver is tanking and hence the ratio.

[bart]

Re: What is going on with the Gold/Silver ratio?

Indeed, and I'd extend that thought a bit by observing that the ratio also inversely measures economic confidence.