28 Jul Gold/Silver Ratio Closing
Many of my previous articles contained information on the gold/silver ratio. For example, if this ratio is 90, it basically means that you have to buy 100 one ounce silver coins to match a one ounce gold coin. This ratio has been used by investors for more than a 100 years. Pre-1900 the ratio was about 15/1 because the US Geological Survey estimated that there is about 17.4 times more silver than gold in the earth’s crust. The idea is that when this ratio is very high, one should start to sell your gold and buy silver. During the 20 th century the ratio fluctuated between 47-50. In order for this ratio to be achieved the silver price must be around $60.
The historical gold/silver chart to the left shows the huge swings that has occurred over the years. We can clearly see on the chart that the ratio is at one of the highest levels it has ever been. The ratio on 5/07/2019 went to a high of 93.49 and then suddenly started to drop to 86 on 26/07/2019. We saw gold drop back slightly and silver picking up speed. I have been warning about this gap that is going to close for some time.
It is also of vital importance to keep an eye on the world stock markets. On Friday the S&P 500 made a new all time high again. The madness continues and investors are lulled into this false sense of security. The sharp correction we saw in December 2018 are forgotten. The pain that we experienced has faded and investors are falling into the same old trap as before. The analogy of the stock market and a coiled spring comes to mind. The stock markets are currently stretched to breaking point. We all know what happens to the spring when it is released. It returns to its natural state VERY QUICKLY! It also tells us that the big money has not yet started to flow into precious metals yet. We can still buy silver at very cheap prices compared to gold.
You can just imagine how fast the silver price will rise when the stock markets crash and all that money moves into physical gold and silver. In a recent live television interview, Donald Trump made the point that the dollar was too strong and are hurting US trade. If the US allows the dollar to weaken, the gold and silver prices will shoot up sharply.
In conclusion I want you to ponder on how severely your pension ( which are in the stock market ) will be affected should we see a 40% market correction. Do yourself a favor and make sure you protect your wealth by owning physical gold and especially silver bars.
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