Best of the Week
Most Popular
1.Gold Price Target of USD 2,300 - GoldCore
2.Greece Banking System Collapse Monday as ECB Pulls the Plug, Capital Controls Ahead of GrExit - Nadeem_Walayat
3.Why British Muslims Are Leaving Elysium Paradise for Syrian Hell - Nadeem_Walayat
4.Greece BANKRUPT! Financial and Economic Collapse to Follow IMF Debt Default - Nadeem_Walayat
5.Extreme Gold/Silver Shorting - Zeal_LLC
6.European Empire Strikes Back Against Greek Debt Fantasy, Counting Down to GREXIT - Nadeem_Walayat
7.Gold And Silver – Three Choices: Sell, Hold, Hold and Add. A Trading Treatise - Michael_Noonan
8.Gold and Silver Price Headed for Breakdown - Jordan_Roy_Byrne
9.Greece Crisis OXI - Raul_I_Meijer
10.Flatline Investing and Dead End Debt Schemes - Doug_Wakefield
Last 5 days
Syriza Convinces Greece to Commit Suicide, GrExit Beckons, Market Reaction - 6th July 15
Financial and Commodity Markets Become Scary: Crash Point Or Turning Point - 5th July 15
A Revolutionary Pope Calls for Rethinking the Outdated Criteria That Rule the World - 5th July 15
Forget 'Haircut', Instead Syriza Plans Beheading of Greek Bank Depositors, Theft of Deposits - 5th July 15
The Pentagon’s 2015 Strategy For Ruling the World Through Endless War - 5th July 15
United States Celebrates the Disastrous Secession From Great Britain - 5th July 15
Greece Referendum Vote Result Forecast Yes Win, But Depression Will Continue - 5th July 15
The Great Greek Economic Depression - 4th July 15
Happy 4th of July Stock Market Analysis - 4th July 15
The Most Pressing Reason Yet You Want to Avoid Investing in Retail Stocks - 4th July 15
Fed’s Full Normalization and the Stock Market - 3rd July 15
The U.S. Dollar's 2014-2015 Rally: Wave 3 in Action - 3rd July 15
Stock Market Where are we? And where are we Going? - 3rd July 15
Xi’s Anti-Corruption Campaign Is Key to China’s Prospects - 3rd July 15
How the New Iranian Nuclear Deal Will Impact Crude Oil - 3rd July 15
China's Stock Market Rollercoaster Ride Continues - 3rd July 15
Gold Stocks Cheap to Buy but Not for Long - 3rd July 15
Capital Controls and a Bank Holiday in Greece… Here’s How You Can Profit - 3rd July 15
Greece's Varoufakis: I will Resign if there's a 'Yes' Vote - 2nd July 15
The Student Loan Bubble: Gambling with America’s Future - 2nd July 15
Inflation Is Lurking, but This Asset Can Protect You - 2nd July 15
Three Total Wealth Stock Investor Tactics You’ll Need Because Greece Isn’t Over - 2nd July 15
Why This $5.6 Trillion Investor Profit Boom Is Set To Take Off - 2nd July 15
Greek Debt Crisis: "Too late to prepare now" - Video - 2nd July 15
Guaranteed US Dollar Death Dynamics - 2nd July 15
The Greek Stress Test & The Reality Of Incremental Changes - 2nd July 15
Forget Drachmas Greece Syriza Government Could Instruct Central Bank to Print Euros! - 2nd July 15
Greece Debt Crisis Trigger for Stock Market Crash or Bull Rally? Video - 1st July 15
Gold Stocks Break Below 2008 Low - 1st July 15
SPX Stock Market Retracement May be Over - 1st July 15
Silver Tunnel Vision 'Experts' - 1st July 15
Gold And Silver - Monthly, Quarterly Ending Analysis - 1st July 15
Europe’s Controlled Demolition - 1st July 15
The End of Dow 18,000; Bailouts No Longer Extended  - 1st July 15
Athens Mayor: Greek Government Should Resign - 1st July 15
China Stocks - This Is What a Bubble Looks Like - 30th June 15
Stocks Plunge on Greece Euro-Zone Financial Armageddon Blackmail - 30th June 15
Greece Crisis Shows Importance of Gold as Europeans Buy Coins and Bars - 30th June 15
Stock Investors Express Route to Profits in the Healthcare Sector - 30th June 15
Beyond the Greek Impasse - 30th June 15
Gold GDXJ : Impulse Move Pending - 30th June 15
Fed Interest Rate Increase Could Be Best Thing to Happen to Gold - 30th June 15
Marc Faber - Greece is Basically Bankrupt - 30th June 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

China Stocks - Where are they going?

Gold and Silver Supply - Will the Real Ratio Please Step Forward?

Commodities / Gold and Silver 2012 Nov 16, 2012 - 08:05 AM GMT

By: Dr_Jeff_Lewis

Commodities

Best Financial Markets Analysis ArticleThose attracted to the precious metals markets are often curious about the various ratios existing between gold and silver, as well as what these ratios might reveal about the relative fair values of these key investment metals. 


Various Gold and Silver Ratios

The following bullet points provide some facts you can use in your silver/gold ratio analysis.

Above ground:

  • Investment grade: The ratio of investment grade gold existing in bullion form is as much as five times that available for silver.
  • Everything else: All the gold ever mined has been estimated at 160,000- 170,000 tons of gold or roughly 5 billion Troy Ounces. A reasonable estimate for the total amount of silver mined is 56 billion Troy Ounces.  This makes the “ever mined” ratio roughly 11.2 to 1.

Below ground:

  • Potential: The below ground ratio of silver to gold has been estimated at 17 to 1.
  • Actually Mined: Typically, 10 ounces of silver are actually mined for every 1 ounce of gold mined. On an annual basis, roughly 900 million ounces of silver are mined overall compared with just 90 million ounces of gold.

The Paper Markets:

  • The ratio of the price of silver to gold as recently determined by the paper futures market is roughly 53 ounces of silver to one ounce of gold. 
  • As of today, spot silver is trading at $32.65 per ounce, while spot gold is priced at $1724.00 per ounce, making the price ratio a remarkably high 52.80. 

Other Factors to Take Into Account:

  • Sequestration: Both precious metals are highly sequestered and accumulated by individuals for strong psychological reasons, and so they are typically held by strong hands.
  • Industrial Demand: Silver is typically consumed by its industrial applications, such as in medicines, photography and solar cells. Gold is used much more sparingly by industry and is more likely to be used in readily recyclable applications like jewelry.
  • Coin Investment Demand: According to the U.S. Mint, roughly 50 times as much silver is being bought compared to gold for coin investment purposes.

The Ratio on The Street

Given the various ratios mentioned in the previous section, which are typically much lower than those observed in the paper markets, one must be left wondering just how such a high silver to gold price ratio can be sustained over time in the commodity markets and on The Street. 

Although peak silver may never come in our lifetimes, this supply and demand situation indicates that silver’s price is very likely to rise relative to gold over the longer term, thereby reducing the silver/gold ratio substantially.

More Reasons Why Silver Should Rise Relative to Gold

Need some more reasons that the price of silver will soon be playing catch up to gold’s price?

Although gold may be easier to hide or carry than silver due to it being more valuable per ounce, and both silver and gold can be purchased in investment grade forms, consider the following benefits of owning silver:

  • You get more physical silver for the fiat money you spend.
  • Silver investors stand to gain more as the silver/gold ratio falls.
  • Silver is more suitable for people with smaller amounts to invest.
  • The average person buying silver has a store of value and a backup hard currency in smaller denominations that are more easily spent for necessities.

Of course, you can always easily trade your silver for gold, and vice versa, while other commodities are not nearly as easy to barter with.

For more articles like this, and to stay updated on the most important economic, financial, political and market events related to silver and precious metals, visit www.silver-coin-investor.com

By Dr. Jeff Lewis

    Dr. Jeffrey Lewis, in addition to running a busy medical practice, is the editor of Silver-Coin-Investor.com and Hard-Money-Newsletter-Review.com

    Copyright © 2012 Dr. Jeff Lewis- 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 losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2015 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

Biggest Debt Bomb in History