Trading Some Gold For Silver

Commodities / Gold and Silver 2014 Dec 10, 2014 - 02:13 PM GMT

Last Friday I decided the gold:silver ratio was so out of line that I swapped some of my gold for silver. The ratio is a measure of how many ounces of silver it takes to buy an ounce of gold.

Exchange Rate

My exchange rate last Friday was as follows: "USD 38.2355/goldgram & USD 16.3589/silver ounce" where 1 gram (g) of gold Equals 0.032 troy ounces (oz t) in gold.

Simply stated, I traded some of my gold at $1194.859375 for an equivalent dollar amount of silver at $16.3589.

This does not constitute a recommendation, I am merely stating what I did.

Previous Physical Metal Transactions

On April 27, 2011 I announced Taking Silver Profits - Swapping Silver for Gold.

I have held physical silver and gold investments continuously for 5 years, and on and off before that. Today I cashed out of silver, trading it for an equal dollar value of gold.

For the sake of full disclosure, my physical precious metals holdings are now entirely at GoldMoney and I have an affiliate relationship with them.

At the time, silver was roughly $46 and gold roughly $1500. Since I sold every ounce I had that was a good move. My next move wasn't that great.

On May 1, 2012 I announced I'm Swapping Some Gold for Silver.

Fortunately I only bought back about 1/3 of what I sold. Here was my exchange rate: "USD 53.4986/goldgram & USD 30.9600/silver ounce".

My expectation all along was for silver to dip to the low $20s but a couple rebounds from the high 20s to the 30s caused me to change my mind.

Fortunately I had more patience on this add, and I just bought the rest of my silver-relative-to gold allocation.

Time will tell if "gold at $1194.859375 for an equivalent dollar amount of silver at $16.3589" is a good trade, but I like my chances.

Gold-Silver Ratio

Gold/Silver Ratio versus Silver/Gold Ratio

The above chart courtesy of Nick at Sharelynx Gold, also known as Gold Charts "R" Us. Nick has a free week on his charts. Gold Charts "R" Us has 1,000's of pages and over 10,000 charts on a subscription basis, but you can check out the site for free until December 14.

Ratio Synopsis

In late 2008 it took 85 ounces of silver to buy an ounce of gold. That was a great time to buy silver relative to gold.

In April of 2011, when I sold all of my silver, it took roughly 33 ounces of silver to buy an ounce of gold, a great time to dump silver for gold (or as it turns out, an even better opportunity to go to cash or treasuries).

It remains to be seen if this is a good opportunity to buy silver, but I like my chances, not only because of the gold-silver ratio, but because I believe precious metals in general represent a good buy opportunity at this time.

Metal-to-Metal Swaps

Swapping one precious metal for another is an easy transaction at GoldMoney.

For further discussion, please see Physical Gold and Silver vs. Paper Gold and Silver: How Much Markup Are You Willing to Pay?

By Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Click Here To Scroll Thru My Recent Post List

Mike Shedlock / Mish is a registered investment advisor representative for SitkaPacific Capital Management . Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Visit Sitka Pacific's Account Management Page to learn more about wealth management and capital preservation strategies of Sitka Pacific.

I do weekly podcasts every Thursday on HoweStreet and a brief 7 minute segment on Saturday on CKNW AM 980 in Vancouver.

When not writing about stocks or the economy I spends a great deal of time on photography and in the garden. I have over 80 magazine and book cover credits. Some of my Wisconsin and gardening images can be seen at MichaelShedlock.com .

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.

Mike Shedlock Archive

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

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.