The silver to gold ratio is the number of ounces of
silver equal in value to one ounce of gold.
Silver to Gold Ratio Today: 54:1
Silver to Gold Ratio Ten Years ago: 80:1
Silver to Gold Ratio for over 200 years: 15:1
Silver to Gold Ratio expected in the future: 10:1 or even 5:1
Conclusion: You can make 5 to 10 times more money if
you buy physical silver, rather than gold, as silver's gains outpace the
returns of gold in the future.
Why will Silver's gains continue to outpace gold?
1. Silver has been consumed by the electronics industry
ever since WWII, consuming on average 7 tenths of an ounce of silver per
person, in the industrialized world for the past 68 years.
2. Silver has been demonetized, meaning, not used as a
circulating currency, anywhere in the world for about the past 49 years. This
lower demand has allowed for the possibility of the over consumption of
silver in point number one, without driving the price through the roof. To
further decrease investment demand for silver, the world's experts estimate
that over 99% of investment demand for silver has been diverted away from
physical silver into alternative paper silver investments such as ETF shares,
allocated and unallocated accounts, futures, options, certificates, &
storage programs. In summary, if any LBMA member bank or broker and even many
non LBMA brokers, has any of your money "in physical silver" it is
likely not silver, but fraud. In the world of silver, if you did not lift it,
if you did not touch it, if you've never seen it, then 99% of the time, you
don't own it, then you can be 99% sure that your money was never spent on
silver and that your money has been diverted away from silver.
3. Monetary demand for silver and gold is returning,
primarily as a store of value and as a form of savings and investment,
because all the governments of the world continue to print up far too much
paper money to pay for government spending that is counterproductive and
hurts the economy. The lack of political will to reign
in spending will continue to propel the gains in silver for at least the next
The real physical silver market remains tiny. Only
about $3 billion per year is flowing into physical silver for investment, about
100 million oz. at $30/oz. This is bound to vastly increase as government
spending continues, as the US government spends about $1500 billion more per
year than they collect in taxes, which means they have to print that money,
which devalues the rest of the dollars, which causes the prices of all things
to go up, and especially causes rare things with lasting value, like silver,
to go up even more.
In the spring of 2003, gold prices had moved decisively
above the $330/oz. level, up to even $350 to $360, up from hitting a double
bottom of about $250/oz. in 1999 and 2001. Silver was lagging, and hit a new
low at $4.15/oz.
In the spring of 2003, it was time for silver prices to
catch up to the move up in gold prices. Silver prices did catch up, and
surpass gold prices, by way of percentage gains. The price ratio went from
about 80:1, down to about 50 to 1 today.
Back in 2003, the consensus among most investors
regarding silver was that if silver presented such a great deal, then silver
mining stocks would outperform silver. That was correct until about 2006,
when the entire mining and exploration sector got overheated. By 2008, the
silver price crashed from $20/oz. to $9/oz., in a price manipulation
orchestrated by JP Morgan who took over Bear Stearns who had a large short
position in silver. This price decline really helped to take down the prices
among mining stocks, as investors began to flee the sector, fearing even
brokerage collapse failure as among the risks to consider when buying mining
stocks. Among other risks are naked short selling of mining shares, and in
general, a lack of trust in regulators and brokers throughout the entire
The mining industry has yet to recover, and many
analysts continue to wonder why so many smaller cap mining shares and
exploration stocks continue to lag the prices of silver and gold which have
done very well over the last decade.
Regardless of the opportunities in the mining and
exploration stocks, it is my opinion that silver and gold will continue to do
very well for investors in the USA over the next decade due to political
spending. But the rest of the world's currencies have the same problem, and
in most cases, remain in worse condition politically.
Silver and gold have been in substantial bull markets
for the past ten years in all currencies, going up from 200% to 400%, and
will likely continue this trend for the next decade.
short term price predictions:
Silver should continue to do better than the last ten
year average of about 22% per year, on average, from $4.15 to $30 over ten
years. Expect 30% per year, on average. Expect silver to do worse right after
it has gained more than 30% in the prior year, and expect silver to do better
after a year when it has done worse.
Silver prices have stagnated, consolidated for the past
two years from the prior peak of just under $50/oz.
I expect silver prices near $45 to $50 before the end
of 2013. $50 will likely be an epic price battle that may last 6 months to a
Silver should hit $75 to $125 in the next peak or run
up, likely sometime before the end of 2014.
I strongly advise you to take possession of real gold and silver, at anywhere
near today's prices, while you still can. The fundamentals indicate rising
prices for decades to come, and a major price spike can happen at any time.
JH MINT & Coin Shop
13241 Grass Valley Ave
Grass Valley, CA 95945