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Gambler, part time invester, fisherman, and comedian. B.A. degree in criminology with a half semester M.B.A.
  • The Gold And Silver Reaction  0 comments
    Oct 22, 2013 11:03 AM | about stocks: SLV, GLD

    24 hour gold silver ratio chart

    The job data is out and apparently traders are not buying it. As you can see by the more recent Gold/Silver ratio today (, silver closed in on gold after economic uncertainty was factored in. Silver is known to be a lot more volatile than gold and when the metals prepare for a bull run it is no surprise when silver kicks off the race at a faster pace. For example, if gold goes up 1% you may find silver moving up 3%. A basic technical analysis of SLV and GLD shows this volatility. When that occurs the ratio becomes smaller and comes close together. Pre-market the ratio was 59.8:1 and quickly dropped to almost 58.6:1. Still far from the controversial gold buff ratio of 17:1. Then again 17:1 is about as pragmatic as every dollar being backed by physical gold.

    (click to enlarge)

    Now with the Affordable Care Act (Obamacare), employers are ahead, since a part time worker employee base has been cheaper than having full time employees. This reminds me of my childhood vacation to Greece. I observed workers waking up in the morning and heading to their place of employment. Approximately 4 hours later, employees went home for a Siesta and never made it back to work again. Here in the U.S. I can see this being a blessing for afternoon traffic. In reality, dual income families have a hard enough time making ends meet and prices at the local supermarket increase regardless of how speculators argue deflation vs. inflation.

    The following public information was provided by the Bureau of Labor Statistics:

    Table 1.
    Item Average price (dollars)
    January 1913 January 2013


    $0.056 $1.422


    0.033 0.524

    Fresh milk, per gallon(1)

    0.089/quart (or 0.356/gallon) 3.526


    0.222 5.832


    0.409 3.501


    0.299 5.902


    0.016 0.627


    0.086 0.715

    Sirloin steak

    0.238 5.705

    Round steak

    0.205 5.074

    Chuck roast

    0.149 3.696

    Pork chops

    0.187 3.465


    0.254 4.407


    0.251 2.693

    Eggs, per dozen

    0.373 1.933


    0.058 0.683

    (1) Milk average prices were recorded per quart in 1913 and per gallon in 2013; the 1913 average prices have been converted to gallon equivalents. Milk was further characterized as "whole, fortified" in 2013.
    (2) This is the average price of butter in January 2012. Data for January 2013 were not available.

    Note: All average prices are per pound, unless otherwise noted. Source: U.S. Bureau of Labor Statistics.

    In conclusion, gold and silver are receiving huge demand all over the world due to the long term rise in price. These two precious metals are going to be the best sought after investment as confusion continues to enter the marketplace during the debasement of the U.S. dollar.

    Disclosure: I am long SLW.

    Stocks: SLV, GLD
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