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Gold vs. silver: Reasons for investing in both still abound, but they're not the same - silver...

Gold vs. silver: Reasons for investing in both still abound, but they're not the same - silver looks more like tulips lately, while gold is still gold. There are key differences: not only in supply of the metals, but the out-of-whack gold-silver price ratio.
Comments (55)
  • SLV is way too volatile for me these days...SLV for this year is up 13.9%...SPY is up its peak SLV was up 56.6%...Parabolic
    exits are usually messy ( reference Tech Stocks in 2000 and EEM in 2007)...I am
    stepping aside from SLV....
    14 May 2011, 08:37 AM Reply Like
  • bbro,


    I use the paper silver (SLV, SLW) as a hedge to my physical. Agree that going paper on its own is too risky due to the massive manipulation in the big paper houses (read: JPM, HSBC) and their regulatory slaves (read: CFTC, CME)
    14 May 2011, 09:25 AM Reply Like
  • Mguy...I have a very very small physical silver amount...if i ever wanted
    a bid where do you suggest I go?? I have gotten some horrendous
    bids in the past.
    14 May 2011, 09:52 AM Reply Like
  • for physical bbro, my fav is APMEX.
    14 May 2011, 10:27 AM Reply Like
  • Excellent...thanks...
    14 May 2011, 11:02 AM Reply Like
  • bbro


    You might want to take a look at gainesville coins as i have been dealing with them for a couple of years and they seem to be the lowest. I have one personal contact and if you need his info please send me a pm. Good Luck


    14 May 2011, 01:18 PM Reply Like
  • bro - go to Tiffany - that's what this stuff is good for - we have a silver dinner set for 12 - Elsa Perreti - that I am trying to convince my wife to sell - so far no luck


    14 May 2011, 02:50 PM Reply Like
  • yeah bbro...listen to condoc and go to Tiffany where you'll pay 400% over spot.


    Oh, and that's not even for pure silver, but for 92% sterling.


    Tell me econ, what are you asking for your supposed silver dinner set?
    14 May 2011, 03:18 PM Reply Like
  • Don't get me going on Sterling Silver Dinner extra from Wife's side...she wouldn't even let me get a bid...
    14 May 2011, 04:53 PM Reply Like
  • This is a serious question to you think the 92.5% content of
    sterling silver puts it in another market??
    14 May 2011, 04:55 PM Reply Like
  • bbro,


    not another market, but rather another pricing structure that's lower due to it's purity weight. However, if the pieces are "rare" (ie - old coins) then potential value goes up to what market will bear.
    14 May 2011, 10:17 PM Reply Like
  • Your question was not clear. I am guessing that you would like to know what the physical silver you own is worth. If that is the case I suggest, believe it or not, that you go to EBay and search for the coin that you have. You will see what the coin you own is selling for. Don't be fooled, the coin gets the most bids in the last 15 minutes of the listing. I recently listed a coin on Ebay in April (at the height of the mania) and watched in stunned disbelief the coin get bid up $100 over my already inflated asking price. People were literally climbing over each other to buy the coin. That week I listed 50 coins and sold every one. Last week after the crater, I listed another twenty and I did not sell one. I am not worried. By the end of the year silver will be $60.00 an ounce and by 2013 silver will be $100 an ounce. People see the dollar getting crushed and they want to hold something to hedge the dollar. Gold is to expensive for the average guy so they buy "poor mans gold" because they can buy more hard assets for the price of an ounce of gold. If you can wait you will sell your coins for a lot more in a year or two. As for the SLV ETF the institutional buyers have gone somewhere else so this volatile play has become even more volatile. Having said that I did very well in the last parabolic run and I have reopened a small stake at $32.50 but be careful because a lot of smart people say SLV might go back and test the 200 day moving average at $28.00. If it does I'll buy more. Good luck!
    19 May 2011, 09:18 AM Reply Like
    14 Jun 2012, 10:36 AM Reply Like
  • If the primary reason for many to enter the precious metals trade is as a hedge against dollar devaluation, wouldn't it be simpler just to short the dollar instead ?
    14 May 2011, 08:54 AM Reply Like
  • Charmin or Scott, paper is paper.
    14 May 2011, 09:34 AM Reply Like
  • Even the extra soft kind???
    14 May 2011, 09:54 AM Reply Like
  • Good point bbro. Charmin is soft on the skin, but gold coins feel plenty good on the fingers.
    14 May 2011, 10:11 AM Reply Like
  • what would you short the Dollar against? The Euro, Yen, gold? Any long position is essentially a short bet on Dollars, so choose your benchmark. Silver works fine for me...
    14 May 2011, 12:54 PM Reply Like
  • Kenny - when the chattering classes on SA start to short the USD and buy silver - that tells you this is not the thing to be doing.


    I doubt that you will make much if any money on new positions in silver or short the USD from this point on over the next 12 mos.


    take the any stock market weakness to buy it - that's the smart thing to do.


    14 May 2011, 02:56 PM Reply Like
  • short dollar against what? euro? dollar index can go up or stays flat but inflation takes away the purchasing power.
    17 May 2011, 08:28 PM Reply Like
  • Dave Kansas...What a load of main stream media redux. I can truly say that there is nothing of consequence in your article...just everyday baloney. You comments about GSR reverting to norm...and yet you can't even justify norm except for "that's what it's been for the last 10 years." Sorry.
    14 May 2011, 08:54 AM Reply Like
  • Agree wholeheartedly Mark,


    The WSJ, NYT, etc, etc have become open "Blue Horseshoe loves (insert play)" shill houses.


    The best was just yesterday, on CNBS, Fortune Magazine's Editor-in-Chief saying US stocks are a BIG buy-in right now. Talk about irresposible and flagrant shill journalism...whew.
    14 May 2011, 09:29 AM Reply Like
  • Reversion to the mean is a statistical argument, not a market argument. Its an everyday argument but one that people easily dismiss despite mountains of empirical evidence. All else being equal, any value is more likely to return to the mean of the sample from which it is sampled. This explains many observations across both human behavior and the physical sciences (e.g. why sports players do worse after being featured on the cover of sports illustrated covers than they did before, why genius parents are likely to have kids that are not as smart as they are etc).


    This does not mean that it necessarily has to go back to the mean and is silent on when it will go back to the mean, but it does mean that the evidence required to abandon this belief is much higher. Also, the current ratio is below the average of the last 40 years... thats a pretty long term trend (yes I know things were different in Rome, but I'm not sure whether it is fair to compare economies across this length of time, if you want to I suggest you go huge on cinnamon futures)


    Personally, it seems clear that the crash followed the margin hikes, and thus even if margin hikes do not directly push down the price of silver, they seem to do so indirectly through their effect on investor behavior. It also seems that there is some support in the spot price around 33... The margin hikes may be extraordinary circumstances, or they could be the new normal. We'll see next week.
    14 May 2011, 10:45 AM Reply Like
  • Very good comments, easy to follow and thats what I need. I am new to 'all this'. I started a new 'personal journey' for me about ayear ago, to learn as much as I can about the stock market and trading my own trades. I have a portfolio of around fifty k and right now mostly in precious metals, still long on silver and gold. I know diversification is the norm but I am learning on my own,and for months now I have been watching slv and gld climb. Most everyone preached 'long on slv and gld' and suddenly lessons on 'corrections'. Wassup? I know its not my slv. I am still long, is this right or wrong?
    14 May 2011, 12:09 PM Reply Like
  • I have used plenty of statistics in my career and I have no problem with using them as a tool. My biggest problem is that all data series were historical data series. And...history is simply that...a manifestation of the realities that existed at the time.


    You can talk about historical GSR all you want...but, at least in this country, unless my memory is getting foggy...we have an unprecedented situation with $14.3 trillion debt and $1.5 trillion in annual deficits for the forseeable future. We have a challenge to the "reserve" currency status. So my view is that the historical data set is not necessarily relevant to the analysis.


    History was irrelevant in Weimar Germany. And, we'll find the same thing as far as Greece is concerned.
    15 May 2011, 11:55 PM Reply Like
  • Here's a more rational look at the Gold/Silver Ratio (GSR), along with select good commentary.

    14 May 2011, 09:41 AM Reply Like
  • SLV has yet to find a bottom, it just cut through 65DMA twice like back in late Jan after a 15% sell off, but this time it was much more decisive, a quick 30% sell off and on huge volume, IMO mid 20s finding support at 200DMA is good place for it to form a base, this would wipe out all gains made since last Nov, weak hands would fold, holders prior to the run up would hold. Biggest thing is silver has to fade from the headlines for several months.
    14 May 2011, 09:45 AM Reply Like
  • enigmaman,


    You may end up being correct, but I've found in highly manipulated environments such as SLV, technical analysis is a crap-shoot. For example, do you think the technicals were key, or the CFTC and CME raising margins 8 times on PM's ?
    14 May 2011, 09:53 AM Reply Like
  • MG- everything is manipulated including securities just some more so than others, the recent margin requirements you mentioned were intended to manipulate the silver market and it worked. Fed, Geithner statements etc all are intended to manipulate the markets in one way or another. Creating bubbles and bursting bubbles takes manipulation whether intended or not. So if Silver is being manipulated why not go along for the ride, just know when to get on and off. technical analysis might be a crap shoot but its all driven by human behavior and that simply breaks down to two basic emotions "Greed and Fear" Right now there is fear in the silver trade and that could drag it down to its 200DMA, if it quietly bases for a few months then there is no reason for it not to gain the support of investors again. But If it drops and or quickly rebounds then the volatility will remain and it will be for the traders to play and lose.
    14 May 2011, 11:48 AM Reply Like
  • very good points. What I failed to mention was how many seem to lean too much on technical analysis. I personally believe it has great merit as a tool when put into context as you just did.
    14 May 2011, 02:09 PM Reply Like
  • The disinformation bear, or the euphoric bull, pundits skirt the real issues relating to the PM market; 1) the laws of supply and demand, and 2) the relative scarcity (availability) of both gold and silver for investment purposes.


    In a era where the world economy is flooded with unpayable and unsustainable debt and political and sovereign unrest, it becomes obvious to populations that have historically viewed and purchased PMs as a store of wealth to continue to accumulate, especially as many more now have the economic ability to do so.


    The vast majority of gold ever mined has been hoarded, whether in the form of jewelry or bullion, and rarely reaches the market. Over 90% of silver ever mined has been lost or destroyed in industrial processes.


    Short term trading is problematic, and recently has been quite bearish as it has been governed by manipulation and suppression schemes, especially in the paper markets. Longer term holding of physical remains bullish; but it requires patience.
    14 May 2011, 11:53 AM Reply Like
  • Seeking Alpha needs two silver categories, Paper Silver and Physical Silver. That way I don't have to waste any time looking at articles about paper silver. As far as the silver/gold ratio goes, it is a worthless investing tool and can only be looked at as a historical reference. Do not make decisions to buy silver or gold based on the ratio.
    14 May 2011, 01:01 PM Reply Like
  • Marketguy, Apmex has doubled there commission in just the last month. You could get the 10 oz bars for 89 cents over spot . Now everything is above 2 bucks + per oz.


    Not even the bags are priced good as of this morning. Too bad. They are top notch service wise. I keep there site on all day as I like there spot service. It is as it needs to be is RIGHT on !


    Anyway, the WSJ article is a fun read and it seems my 16 ratio isn't too far off. Since this is 5771 to me an not 2011 I can use info from 3000 more years.......


    Gold is always going to outshine silver and that is why it costs more and as I have said an has been written for years silver is gold's tail and when things get excited it wags violently.


    All should know I too love the real stuff and also use SLV for fun.


    I think 33 spot will hold , butttttttttttt, I could see killing Momar K in Libya droping the metals an oil for a bit... I don't have any SLV as of yesterday and I might hold off unless it drops more than 2 points intra day an then I'll nibble for a few hours. My last 2 bags of coins are now free as a result of the SLV deals.........


    To all those who say Silver is 1/80th or 1/60 or any other high divider your wrong..........


    I don't even buy silver or gold as true inflation hedges anymore ,but, I do know that a silver half dollar can still buy what it did back in the 1960s easily.


    2 slices of pizza and a large drink 50 cents.......... Well take a silver half to a pawnshop and you'll buy 2 slices an a drink and get some real change............


    A gold coin and the shop owner might give you the keys in some cities. Keep buying real silver an gold if ya got the dollars.
    14 May 2011, 01:01 PM Reply Like
  • correct regarding APMEX spot prices. However, you'll find all the silver houses have done so. I am a big service guy and you are also correct that they are the tops. I'm always looking for great silver deals, so anyone that has leads I love checking them out.
    14 May 2011, 02:13 PM Reply Like
  • Maket


    Then give me your opinion of Gainesville coins who are only a buck over spot, Am i missing something??


    14 May 2011, 03:47 PM Reply Like
  • ace,


    At a buck over spot? No, you're not missing anything. That's a good deal. I don't know their reputation, and do know their are many fakes out there, so that would be my only concern.
    14 May 2011, 04:09 PM Reply Like
  • My number one coin and bullion dealer.
    15 May 2011, 12:50 AM Reply Like
  • www.gainesvillecoins.c...


    They are rated #1 by NIA but i guess i should not be giving this secret out as i am not done collecting my physical


    15 May 2011, 09:24 AM Reply Like
  • Gainesville??
    16 May 2011, 12:24 AM Reply Like
  • I use California Numismatic Investments.
    I first bought silver from them when it was $7.20 and have been buying gold since it was $440. Best prices and great service. They do exactly what the say.
    I'm still buying both as much as I can.
    16 May 2011, 12:52 PM Reply Like
  • Silver is looking like tulips? It's funny - the tulips sitting in a vase on my dining table will be dead in a few days, but the silver candlesticks will not. But seriously, even a cursory knowledge of bubbles and manias will tell you the recent prices in silver were nothing like Tulipmania.
    14 May 2011, 01:01 PM Reply Like
  • the guys who bought the tulips said the same thing


    14 May 2011, 02:46 PM Reply Like
  • As I said, Tulips look pretty for a few days, then they die. Silver is a durable, useful commodity that has been used as money for thousands of years and will be in the future.


    But if you think Amazon is a better buy at these levels, please don't let me stop you.
    14 May 2011, 05:56 PM Reply Like
  • Econdoc,


    I doubt Tulips were bought as a hedge for Global, Competitive, Currency De-Basement, you think?


    They likely did not have much in the way of industrial use either.


    As such your comparison is simply asinine.


    That said, it is volatile and until recently, had gone too far, too fast, even if one was using it for the purposes I mentioned.


    Given the recent pullback it is likely a value at these levels for the long term.


    Short term, who the hell knows.


    Anybody that claims to know that is as out of touch with reality as yourself.
    14 May 2011, 07:08 PM Reply Like
  • The selloff in silver was due to seasonal factors. May is typically a weak month for gold and silver and right on cue we get a selloff.


    The bull market is not over but the rise in margins was needed. The government took a lot of flack for not stepping in sooner with mortgages and it was better long-term that some air gets let out of the bubble now.


    Still bullish long-term and I have nibbled at SLV in the $35 area and will continue to do so over the weak summer period.
    14 May 2011, 01:11 PM Reply Like
  • Bloomberg had CME on yesterday and Matt put the manipulation directly too her an she poo pooed it. Saying they always adjust with volatile markets. I wonder how it was the every broker changed there requirements too. No margin....o/k ,but, no using unsettled funds.......... That is 100 % chicken crap ( to quote the Speaker)


    I know of several dozen who had to sell ASAP because of that and it all fed on itself. I am much more confident that the huge volume on SLV is all cash.......... Better for all of us that there is no finance involved. Just the worlds number 1 fiat paper for paper silver.
    14 May 2011, 01:17 PM Reply Like
  • Silver is the "Black Tulip"
    14 May 2011, 05:24 PM Reply Like
  • Have a look at this graph remembering that during the 1900s, 10 billion oz. of silver were dishoarded by governments worldwide as they demonetized silver.


    This threw the gold/silver ratio out of whack. It will return and probably go less that the historic norm of ~ 15:1 as the market adjusts to correct this intervention.

    14 May 2011, 05:26 PM Reply Like
  • Well, i buy physical silver and gold just for thge future supply/demand. All i keep thinking is of 3 billion chinese/indian middle class coming into the market. :).


    BTW 30-33 should be silver bottom. Probably will rise to 63 before dropping again. i see a sideways for quite a while.
    14 May 2011, 08:54 PM Reply Like
  • expain how you come up with 63???? I see numbers all over these comments like i use to see when i gambled on football. Maybe i better go back to


    But all i know is silver will be worth more in ten years than today and that is good enough for me because no one can say that about most stocks..




    16 May 2011, 12:23 AM Reply Like
  • Use Elliot Wave. BTW, i did not say it was not going up further. i expect silver to hit 300 in the long run, 10-20 years.
    16 May 2011, 04:59 PM Reply Like
  • Note to ECONDOC. This site is for serious, mature and courteous individuals to weigh in with opinions and comments. Kindly gather up you crayons and return to FACEBOOK. I thank you.
    14 May 2011, 10:04 PM Reply Like
  • 63......... humor my good blog buddy....... Is there no room for humor ? I was just responding to the Comex silver depletion chart. Smile,smile smile, please


    Now on a sad note :


    The Middle East violence has been all over the place for months and as I predicted has now hit Israel yesterday from 3 sides........


    As a Jewish/Arab person I see this action as the one thing that will unite all the Arab's to set aside there current differences.... Suni / Shia and there Monarchy / democracy thing......... Were looking at a massive action this coming June as that planned flotilla heads towards Gaza.


    Israel must act and several of these ships are from countries too big to be dismissed........... This could bring out the Masada instincts and this could be all out war. I wouldn't even dream about the Middle East oil if this happens........ 200 - 250 - 300 a barrel. Metals .........woopaaaa


    The Dow Jones is named after Mr. Dow, daaaaaaaaaa
    He said the best time to buy is when there is blood in the streets........ I say to all....... Pick out what your most comfortable buying and keep your buying powder dry an get ready to pull the trigger or clic the mouse/
    Sadly, golfitobob
    16 May 2011, 04:01 AM Reply Like
  • I agree, but first you will see oil at 65-70 before you see it at 250. Look at where silver is at now, since my last comment. Took quite a dump did'nt it. That's all i mean. In the long run, we are in a bull market. This is just the first stage. At correction bottom, smile, smile, smile. :)
    And BTW my take on silver in the long is over 300. But right now i am looking at the present correction in both silver and Oil. Here's a tip. Cameco is going to ROAR!!! Uranium has completed it's correction and i love all that's Canadian related, especilly Banks and Commodities. :)
    16 May 2011, 05:07 PM Reply Like
  • nmelendez, I think the fact the Saudi now needs 86 bucks to break even on a barrel of oil your never going to see oil at those levels. Watch what Opec does ! Wait till our buddy from Iran gets on the board..........


    There all buying tons of weapons from China an Russia and good old Hugo is installing missiles....... Then Israel is about 3 weeks from all out war..... Maybe will see the 250 oil............... bueno suerte


    I have many comments here an many other blogs concerning silver that have been on the money. Spot on to say. When silver hot 50 an the cost to borrow SLV went through the roof we all sold an even took the real stuff into town...........


    A week later silver hit 32.78 and we all went into town and I bought almost all my stuff back at spot. No commission because the women thought it was going much lower. Maybe she read some of the poop on this blog.


    I said look to re-enter at 33 as the new floor and as everyday goes by all the idiots calling for 20 will wait with the same ilk that are waiting for the cheep oil.


    Maybe when the fantastic fuel cells are allowed to roll out you might see oil drop ,but, with billions of people still without personal cell/net devices the outlook for silver looks good.No,, great.........


    To all those sure that silver will hit 20 email me please an tell me bla bla bla. I am only 56........ Maybe i'll still be alive.......


    China an India along with most Asian nations are buying huge amounts. China is a large producer of silver and their becoming the number one buyer.......... Were talking billions of potential buyers. Then there is the raging inflation increasing the costs of mining........


    Like I said email me, ha ha ha ha ha ha


    High Oh Silver........ awayyyyyyyyyyyyyyy
    26 May 2011, 04:02 AM Reply Like
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