Gold, place your bets!

[Mega]

Another false Dawn...........or Take off time ?
Mike

[thriftyandboringinohio]

Re: Gold, place your bets!

I can't see any reason for gold to make any sudden price moves.
The gold/silver ratio is more interesting right now. The ratio is way up to 90 now, extraordinarily high by historical standards.
Here's a hundred year chart.

[Mega]

Re: Gold, place your bets!

So Silver is cheap?
Mike

[touchring]

Re: Gold, place your bets!

So Silver is cheap?
Mike

Or rather gold is expensive?

[Mega]

Re: Gold, place your bets!

Silver should be $25

[Ellen Z]

Re: Gold, place your bets!

I can't see any reason for gold to make any sudden price moves.
The gold/silver ratio is more interesting right now. The ratio is way up to 90 now, extraordinarily high by historical standards.
Here's a hundred year chart.

What does that suggest in terms of possible actions?

1) I find myself thinking that if I have cash now to buy additional PMs, I might choose silver rather than gold.

What other possible moves are there, that I haven't thought of?

[Milton Kuo]

Re: Gold, place your bets!

What does that suggest in terms of possible actions?

1) I find myself thinking that if I have cash now to buy additional PMs, I might choose silver rather than gold.

What other possible moves are there, that I haven't thought of?

If you believe the gold/silver price ratio is unnaturally high, a paired trade of short gold/long silver.

[touchring]

Re: Gold, place your bets!

If you believe the gold/silver price ratio is unnaturally high, a paired trade of short gold/long silver.

The problem is that both gold and silver might continue going up.

[jk]

Re: Gold, place your bets!

silver is as much an industrial metal as a precious one. there is good reason for it to lag given the global slowdown. gold is irl not such a good inflation hedge medium-long term, but functions as a refuge in a time of currency confusion. gold is actually also a very good deflation play. so i don't think anything is strange about the au/ag ratio. maybe try finding historical periods with a slowing economy and see what the ratio was then to get a better comparison.

[Milton Kuo]

Re: Gold, place your bets!

The problem is that both gold and silver might continue going up.

If silver goes up at a percentage basis at a faster rate than gold, the trade would be profitable. I'm not saying that the trade is guaranteed to work. I'm saying that for those who believe that the gold/silver price ratio is out of whack and that they believe some reversion to historical norm is going to occur, a paired trade is one possible way to make money on that.

The paired trade will only work if the gold/silver price ratio declines. This can occur if one of the following occurs:

1. Gold falls in price while silver rises in price
2. Gold rises in price but silver rises in price at a greater percentage
3. Gold falls in price and silver also falls in price. However, gold falls at a greater percentage than silver

The only ways to lose money on the trade are if 1) gold rises in price and silver falls in price or 2) gold and silver both rise or fall the same percentage in price. Depending on how one constructs the trade, there may also be a time element involved so timing may also be a factor.

[shiny!]

Re: Gold, place your bets!

What does that suggest in terms of possible actions?

1) I find myself thinking that if I have cash now to buy additional PMs, I might choose silver rather than gold.

What other possible moves are there, that I haven't thought of?

If you're talking about buying physical PMs, you must take premiums into account as well as the base price. But at a 90:1 ratio silver looks cheap relative to gold.

A person can purchase silver when the silver:gold ratio is very high (like now), then swap it for gold when the ratio shrinks. Ignoring the cost of premiums, when the ratio is 90:1, a person can buy 90 ounces of silver or 1 ounce of gold for the same amount of money. If they buy the silver, then when the ratio shrinks to 45:1 they can swap those 90 ounces for 2 ounces of gold.

Big swings in the silver:gold ratio don't happen all that frequently, but swapping one metal for the other at the high and low ends of the ratio can be a cost-effective way to increase one's holdings without spending more money beyond the initial outlay.

That said, silver has been languishing for a lonnnnng time, ever since EJ made his terrific "Time to Sell Silver" call in April, 2011. Who knows how much longer it will be before it climbs out of the hole?

[touchring]

Re: Gold, place your bets!

That said, silver has been languishing for a lonnnnng time, ever since EJ made his terrific "Time to Sell Silver" call in April, 2011. Who knows how much longer it will be before it climbs out of the hole?

Why buy silver which costs real money to mine, when you can just come up with a crypto coin that costs nothing and sell for billions?

[jk]

Re: Gold, place your bets!

Why buy silver which costs real money to mine, when you can just come up with a crypto coin that costs nothing and sell for billions?

as of nov, 2018:

estimate - bitcoin mining accounts for about 1 percent of the world's energy consumption.

As of 2018, the computers on the bitcoin network were doing 342,934,450 gigahashes per second.
Mining companies that run lots of ASIC miners as businesses claim they use one watt of power for every gigahash per second of computing performed when mining for bitcoins.



At this rate, the bitcoin network runs at 342,934,450 watts—roughly 343 megawatts. Calculations based on EIA data reveal that the average U.S. household consumes about 1.2 kilowatts of power, meaning that 343 megawatts would be enough to power 285,833 U.S. homes.

[touchring]

Re: Gold, place your bets!

as of nov, 2018:

estimate - bitcoin mining accounts for about 1 percent of the world's energy consumption.

As of 2018, the computers on the bitcoin network were doing 342,934,450 gigahashes per second.
Mining companies that run lots of ASIC miners as businesses claim they use one watt of power for every gigahash per second of computing performed when mining for bitcoins.

At this rate, the bitcoin network runs at 342,934,450 watts—roughly 343 megawatts. Calculations based on EIA data reveal that the average U.S. household consumes about 1.2 kilowatts of power, meaning that 343 megawatts would be enough to power 285,833 U.S. homes.

The initial bulk of bitcoins created by the early birds didn't require such a large amount of energy to mine, as is the case for most other crypto. The subsequent effort to mine for bitcoin is only a cover. Without this effort to slow down the creation of bitcoins, governments would have felt threatened by it and all would have banned bitcoin. Now with corporations like Facebook getting onto the crypto bonanza, others like Apple, Amazon and Google and a thousand other corporations will follow and you can be sure that central banks will have no choice but to come out with regulations and these will apply to all cryptos.

[jk]

Re: Gold, place your bets!

The initial bulk of bitcoins created by the early birds didn't require such a large amount of energy to mine, as is the case for most other crypto. The subsequent effort to mine for bitcoin is only a cover. Without this effort to slow down the creation of bitcoins, governments would have felt threatened by it and all would have banned bitcoin. Now with corporations like Facebook getting onto the crypto bonanza, others like Apple, Amazon and Google and a thousand other corporations will follow and you can be sure that central banks will have no choice but to come out with regulations and these will apply to all cryptos.

i'm just saying it doesn't cost nothing.