Best of the Week
Most Popular
1.Crude Oil Price Trend Forecast 2016 Implications for Stock Market - Nadeem_Walayat
2.Odds of Winning Walkers Crisps Spell & Go olidays K, C and D Letters - Sami_Walayat
3.Massive Silver Price Rally During The Coming US Dollar Collapse - Hubert_Moolman
4.Pope Francis Calls For Worldwide Communist Government - Jeff_Berwick
5.EU Referendum Opinion Polls Neck and Neck Despite Operation Fear, Support BrExit Campaign - Nadeem_Walayat
6.David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - Mike Gleason
7.British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - Nadeem_Walayat
8.Gold Price Possible $200 Rally - Bob_Loukas
9.The Federal Reserve is Not Going To Raise Interest Rates and Destroy Gold - Michael_Swanson
10.Silver Miners’ Q1’ 2016 Fundamentals - Zeal_LLC
Free Silver
Last 7 days
Operation Black Vote BrExit Warning for the Wrong EU Referendum - 27th May 16
UK Immigration Crisis Hits New Extreme, Catastrophic ONS Migration Stats Ahead of EU Referendum - 27th May 16
Many of the World’s Best Investors Made Their Fortunes This Way…And You Can Too - 27th May 16
The Ugly Truth About Stock Market Manipulation and Gold Prices - 27th May 16
Gold Price Looking Vulnerable While Gold Stocks Correct - 27th May 16
The 5 Fatal Flaws of Trading - 27th May 16
The Next Big Crash Of The U.S. Economy Is Coming, Here’s Why - 27th May 16
A New Golden Bull or Has the Market Gone Too Far Too Fast? - 27th May 16
It Feels Like Inflation - 26th May 16
Negative Interest Rates Set to Propel the Dow Jones to the Stratosphere? - 26th May 16
S&P Significant Low has Occurred – Not Likely! - 26th May 16
Statistics for Funeral Planning in UK Grave - 26th May 16
Think Beyond Oil And Gold: Interview With Mike 'Mish' Shedlock - 26th May 16
Hard Times and False Mainstream Media Narratives - 26th May 16
Will The Swiss Guarantee 75,000 CHF For Every Family? - 26th May 16
Is There A Stocks Bear Market in Progress? - 26th May 16
Billionaires Are Wrong on Gold - 26th May 16
How NOT to Invest in the Gold Market - 26th May 16
The Black Swan Spotter...Which Saw the Oil-Crash coming; now says the “Invisible Hand” will push Brent to $85 by Christmas - 26th May 16
U.S. Household Debt Still Below 2008 Peak - 25th May 16
Brexit: Wrong Discussion, Wrong People, Wrong Arguments - 25th May 16
SPX is at Strong Resistance - 25th May 16
US Dollar, Back From the Grave? - 25th May 16
Gold : Just the Facts Ma’am - 25th May 16
The Worst Urban Crisis in History Could be Upon Us - 24th May 16
Death Crosses Across The Board Are IRREFUTABLE Stock Market Sell Signals - 24th May 16
Bitcoin Trading Alert: Bitcoin Price Stays below $450 - 24th May 16
Stock Market Crash Death Cross Doom Prevails - 23rd May 16
Did AMAT Chirp? Implications for the Economy and Gold - 23rd May 16
Stocks Extended Their Rebound On Friday - Will They Continue Higher? - 23rd May 16
UK Treasury Propaganda Warns of 3.6% Brexit Recession, the £64 Billion Question? - 23rd May 16
Stock Market Support Breached, But Not Broken! - 23rd May 16
George Osborne Warns of 18% Cheaper House Prices - BrExit for First Time Buyers - 22nd May 16
Gold Bull-Phase I Continues to Confound (The Trek to “Known Values”) - 22nd May 16 r
Avoiding a War in Space - 22nd May 16
Will Venezuela Be Forced to Embrace the US Dollar? - 21st May 16
Danish Central Bank Stumbles with Its Currency Peg to the Euro - 21st May 16
SPX Downtrend Underway - 21st May 16
George Osborne Warns of More Affordable UK Housing Market if BrExit Happens - 21st May 16
Gold And Silver 11th Hour: Globalists 10 v People 0 - 21st May 16
David Morgan: There Will Soon Be a Run to Gold Like You've Never Seen Before - 21st May 16
Gold Stocks Following Bull Analogs - 20th May 16
The Gold Chart That Has Central Banks Extremely Worried - 20th May 16
Silver Miners’ Q1’ 2016 Fundamentals - 20th May 16
Stock Market Rally At the End of the Road? - 20th May 16
British Pound Soars on BrExit Hopes Despite Remain Establishment Fear Mongering - 20th May 16
NASDAQ 100, FTSE, and British Pound - When Rare Market Data Screams, Listen  - 20th May 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Why 95% of Traders Fail

The Silver Siren: Reversion To Reality

Commodities / Gold and Silver 2011 Sep 07, 2011 - 03:16 PM GMT

By: Rob_Kirby

Commodities

Best Financial Markets Analysis ArticleAccording to the World Gold Council – the overall level of global mine production is relatively stable. Supply has averaged approximately 2,497 tonnes per year over the last several years. 2500 tonnes is equal to 80.4 million troy ozs.


The Silver Institute tells us there were 735 million ozs. of Ag mined from the earth’s crust in 2010.  Simple math [735 / 80.4] tells us that “nature” is implying that the gold / silver ratio should be 9.14: 1.

Historic Gold/Silver Ratio – 650 Years

This is a 650 year graph of silver prices and silver/gold ratio from 1344 to 2004.

Source: http://goldinfo.net/silver600.html

From 1300 to the mid 1800’s – the gold silver ratio never went above 20 and gravitated to 15 – that’s 500+ years worth of equilibrium.  It’s really only been in the past 140 years [while the private Rothschild controlled Bank of England centric debt based monetary system has been in force] that we’ve seen such strange “aberrations” in the gold/silver ratio.

Only a “CHERRY PICKING HACK” would show 140 yrs. worth of PERVERTED data and make the “insinuation” with this data and by naming the piece, ‘140 Years of Silver Volatility’ -  that 15: 1 is “LOW” for the gold / silver ratio. 

What this 140 Years of Volatility better reflects is the political nature of the monetary metals – and how free markets in them stand between spend-thrift megalomaniacs who have increasingly occupied political offices over that time frame.  Take this account explaining the “end of bi-metalism” – which explains silver’s fall-from-grace. The fall created artificial gluts of Ag [artificial because, unlike gold, silver is consumed] – which have been sold-off or generally disgorged for more-or-less the past 100 years.  Well guess what folks?  The very real glut which was synthetically created in silver by ‘de-monetizing’ it – has now been consumed:

II. The end of bi-metalism.
The 19th century is the period when the very long-established ratio of 15 between the price of gold and silver is displaced. Throughout the previous three centuries, this ratio of 15 - or less - had prevailed globally. I shall examine this period in more detail in the next article on the same subject.
The ratio of 15 seems to be a sort of natural balance between the price of gold and silver. This balance was broken at the end of the 20th (19th???) century, with the depreciation of silver.

This depreciation resulted from several factors:

- The end of bi-metalism - silver was no longer a specie metal. This factor seemed to lead all the others

- The increase in production of silver in the United States.
- The sales of silver by Germany, which had furthermore a very strong psychological impact. Germany was in a different situation from the other countries, because it went from a silver mono-metalism to a gold mono-metalism. This was unique, because other countries went from bi metalism to the gold standard. It thus had large inventories to be sold – and the threat of the sales depressed prices more than the sales themselves.

- The sales of silver by the Scandinavian countries.

The volatility we’ve experienced in the past 140, or so, years “IS” the aberration.  The profligate political factors which created the aberration [glut] have now been removed from the landscape.

With above ground stockpiles now gone, along with the re-emergence of investment demand for silver – we WILL return to the historic 15: 1 at a MINIMUM.

This is math and – when it happens - represents nothing more than a reversion to a mean. 

As for silver [or gold] trading at a “premium” to the paper COMEX price – we should all take a deep breath and remember that Eric Sprott is trusted and believed by the public to posses the REAL silver which backs the fund he markets in his name.  Sprott PSLV actually publishes their NAV and share price daily – so, like it or not, there is transparency.  Don’t forget, Sprott PSLV shares are readily convertible / exchangeable into physical silver.

COMEX, on the other hand – is widely – if not universally - understood to possess a “tiny” fraction [perhaps as little as 1/100th] of physical metal for each paper contract they sell.  Getting physical delivery from COMEX is extremely cumbersome and – according to reliable market participants who have been through the process - reportedly inexplicable [if they really have the metal] fraught with delays.  Promoters / adherents of this scheme get around the transparency aspect of the fractional fraud with the semantics of “allocated” and “unallocated” accounts – verbiage which has been developed / adopted to obfuscate the difference between REAL and imaginary. 

At the time of writing - Kitco is charging $ US 45.77 per oz. [9.11 % premium] for a Cad. Maple and $ US 4,382.00 for a 100 oz bar [4.46 % premium] of silver basis spot $ US 41.95 spot for silver.  BMG Bullion Bars [shamelessly and promotionally which are available through myself] are still available at spot plus 3 %.

This brings us to another unfortunate but logical conclusion: we are very likely fast approaching the day when REAL gold and silver will not be obtainable with fiat money – period. 

In order to procure these stores of wealth in the future one will likely be required to trade other REAL ‘tangibles’.  Hurt feelings, vendettas and foul language will not prevent this from happening – and by the way, our “paper markets” are much worse than a joke – they’re criminally hallucinogenic and an insult to free markets and humanity.

Got physical precious metal yet?

By Rob Kirby

http://www.kirbyanalytics.com/

Rob Kirby is proprietor of Kirbyanalytics.com and sales agent for Bullion Custodial Services.  Subscribers to the Kirbyanalytics newsletter can look forward to a weekend publication analyzing many recent global geo-political events and more.  Subscribe to Kirbyanalytics news letter here.  Buy physical gold, silver or platinum bullion here.

Copyright © 2011 Rob Kirby - All rights reserved.

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors before engaging in any trading activities.

Rob Kirby Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife