Silver to Gold Ratio and $1500 gold / $25 Silver
I don't normally FORECAST my predictions for gold and silver. But, I have had quite a few of my readers ask me what I thought the future holds for the gold and silver market.
Because of the weak dollar; which I think will continue, and because of an overinflated stock market, I do have some opinions.
I do believe that first and foremost, the Silver to Gold ratio will move closer back to the 60:1 ratio. Even at today's gold prices of $1320, that would make Silver $22 an ounce. And personally, I think the 60:1 ratio is quite conservative. I also think because of the Chinese stock market and industrial position, this 60:1 ratio is within reach.
But I don't think that gold is going to stay at $1320. I think in the not to distant future, gold will be floating around $1500 an ounce. "Distant Future"???? That could mean months or maybe with a year or two. But I think that is a reasonable expectation. With that, at current 75:1 ratio, a $1500 gold price would put silver right at $20 an ounce. At a 60:1 ratio, that would put silver at $25 an ounce. I see that as a not to distant future expectation.
With the silver mine issues, industrial growth, a stock market that is over inflated, and a weak dollar..... I am looking into the DISTANT FUTURE of gold and silver easily passing it's 2011 highs. Gold will break past $2000 an ounce and silver will easily break past the $50 an ounce level. That's a 40:1 ratio. Realize, that the higher gold goes, the narrower the ratio goes. If gold goes up 3%, silver will go up 4-5%. The higher they go, the narrower the ratio.
Remember; my blog is about using silver, and to a smaller extent gold, to:
1) Protect wealth from inflation
2) Supplement Retirement
3) Pay down debt / Purchase items at a discount
4. Prepare for a possible economic Armageddon
No where in my blogs do you hear me "Speculating" on silver or gold as an "INVESTMENT". History has proven that silver and gold will keep up with inflation. (That's covers 1: Protect wealth from inflation). With it's protection from inflation, it allows you to save towards retirement in a RISK FREE savings. With enough saved, and assuming you didn't need the silver and gold for #4 (Economic Armageddon), you'll have enough silver to supplement your retirement (#2) for a few hundred each month. And of course, there's nothing wrong with having SOME of your silver and gold on hand to pay off debt or purchase items at a discount when the timing is right, but it's not life threatening if you don't do the purchase. E.g. You have 1000 ounce of silver that you have at an average price of $20 an ounce. That's $20,000 worth of silver. Silver goes up to $40-$50 an ounce. You now have access to $40,000 - $50,000 for that new car, pay off your mortgage, etc. at a much discounted price. It only cost you $20,000 to pay off or purchase $40,000 worth of items/debt.
The point is, I anticipate silver and gold to start it's upturn again. When it's ready to head down, I've let you know. Do we care if it goes down? No. That simply means we can exchange dollars for MORE silver and gold. But when it goes up again, you need to have enough silver and gold to do the #1-#4 above as you see fit. One suggestion: IF the price of silver reaches DOUBLE your AVERAGE COST, and you don't have any debt or items you want to buy; and you think you have enough silver and gold to supplement your retirement or prepare for economic Armageddon, then sell enough silver/gold to get your initial investment back. Now; you're sitting with HALF the amount of silver and gold, BUT......... It's is ALL FREE. Your break even price is $0.00. It won't matter what happens to the price after that. Of course, the cash you get for selling half of your silver and gold needs to be put to good use. If you don't have debt, then KEEP IT IN CASH ON HAND. Meaning at home, in a safe, fireproof, etc. That will also protect you against economic crap; like in Greece when the government RESTRICTED how much cash you could take out of the bank or ATM machine. You should have a decent amount on hand to handle such situations. Or like those poor people in Houston and the Texas gulf coast. It would be nice if as they are evacuating, they had cash on them. They could leave and go any place.
Anyway; I see in the not to distant future, gold at $1500 and silver in the $22-$25 range. If you don't have the amount of silver and gold you WANT on hand, now is the time to stock up. Will it bounce up and down? Yes... But don't ever try and TIME the prices. You'll miss out. Dollar Cost averaging is the best. But if you buy in chunks instead, now is a time to buy a chunk. Remember; 1000 ounces at $18 an ounce and at $16 an ounce, is only a difference of $2,000. Meaning, $18,000 worth vs $16,000. That's only a difference of about 100 ounces. Compared to 1000 ounces, that's not that significant. Don't try and TIME the price. And remember; my suggestion for the AVERAGE family is about 500 ounces of silver and about 5-6 ounces of gold. For the larger family, or those with more wealth to protect against inflation and such; I recommend at least 1000 ounces of silver, and about 10-12 ounces of gold.
CYA: SE:
Because of the weak dollar; which I think will continue, and because of an overinflated stock market, I do have some opinions.
I do believe that first and foremost, the Silver to Gold ratio will move closer back to the 60:1 ratio. Even at today's gold prices of $1320, that would make Silver $22 an ounce. And personally, I think the 60:1 ratio is quite conservative. I also think because of the Chinese stock market and industrial position, this 60:1 ratio is within reach.
But I don't think that gold is going to stay at $1320. I think in the not to distant future, gold will be floating around $1500 an ounce. "Distant Future"???? That could mean months or maybe with a year or two. But I think that is a reasonable expectation. With that, at current 75:1 ratio, a $1500 gold price would put silver right at $20 an ounce. At a 60:1 ratio, that would put silver at $25 an ounce. I see that as a not to distant future expectation.
With the silver mine issues, industrial growth, a stock market that is over inflated, and a weak dollar..... I am looking into the DISTANT FUTURE of gold and silver easily passing it's 2011 highs. Gold will break past $2000 an ounce and silver will easily break past the $50 an ounce level. That's a 40:1 ratio. Realize, that the higher gold goes, the narrower the ratio goes. If gold goes up 3%, silver will go up 4-5%. The higher they go, the narrower the ratio.
Remember; my blog is about using silver, and to a smaller extent gold, to:
1) Protect wealth from inflation
2) Supplement Retirement
3) Pay down debt / Purchase items at a discount
4. Prepare for a possible economic Armageddon
No where in my blogs do you hear me "Speculating" on silver or gold as an "INVESTMENT". History has proven that silver and gold will keep up with inflation. (That's covers 1: Protect wealth from inflation). With it's protection from inflation, it allows you to save towards retirement in a RISK FREE savings. With enough saved, and assuming you didn't need the silver and gold for #4 (Economic Armageddon), you'll have enough silver to supplement your retirement (#2) for a few hundred each month. And of course, there's nothing wrong with having SOME of your silver and gold on hand to pay off debt or purchase items at a discount when the timing is right, but it's not life threatening if you don't do the purchase. E.g. You have 1000 ounce of silver that you have at an average price of $20 an ounce. That's $20,000 worth of silver. Silver goes up to $40-$50 an ounce. You now have access to $40,000 - $50,000 for that new car, pay off your mortgage, etc. at a much discounted price. It only cost you $20,000 to pay off or purchase $40,000 worth of items/debt.
The point is, I anticipate silver and gold to start it's upturn again. When it's ready to head down, I've let you know. Do we care if it goes down? No. That simply means we can exchange dollars for MORE silver and gold. But when it goes up again, you need to have enough silver and gold to do the #1-#4 above as you see fit. One suggestion: IF the price of silver reaches DOUBLE your AVERAGE COST, and you don't have any debt or items you want to buy; and you think you have enough silver and gold to supplement your retirement or prepare for economic Armageddon, then sell enough silver/gold to get your initial investment back. Now; you're sitting with HALF the amount of silver and gold, BUT......... It's is ALL FREE. Your break even price is $0.00. It won't matter what happens to the price after that. Of course, the cash you get for selling half of your silver and gold needs to be put to good use. If you don't have debt, then KEEP IT IN CASH ON HAND. Meaning at home, in a safe, fireproof, etc. That will also protect you against economic crap; like in Greece when the government RESTRICTED how much cash you could take out of the bank or ATM machine. You should have a decent amount on hand to handle such situations. Or like those poor people in Houston and the Texas gulf coast. It would be nice if as they are evacuating, they had cash on them. They could leave and go any place.
Anyway; I see in the not to distant future, gold at $1500 and silver in the $22-$25 range. If you don't have the amount of silver and gold you WANT on hand, now is the time to stock up. Will it bounce up and down? Yes... But don't ever try and TIME the prices. You'll miss out. Dollar Cost averaging is the best. But if you buy in chunks instead, now is a time to buy a chunk. Remember; 1000 ounces at $18 an ounce and at $16 an ounce, is only a difference of $2,000. Meaning, $18,000 worth vs $16,000. That's only a difference of about 100 ounces. Compared to 1000 ounces, that's not that significant. Don't try and TIME the price. And remember; my suggestion for the AVERAGE family is about 500 ounces of silver and about 5-6 ounces of gold. For the larger family, or those with more wealth to protect against inflation and such; I recommend at least 1000 ounces of silver, and about 10-12 ounces of gold.
CYA: SE:
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