Monday, September 20, 2010

Gold Silver Ratio

Gold Silver ratio as of Sept, 19th, 2010

The Gold Silver ratio hit a high near ~100 in the early 1990's.  Since then, we have had another peak around the 85 level few years later around 2009. The long term trend is down.

Here is a 2 year Gold Silver ratio chart with a trend line drawn from the highs in 2008 (~84) to the recent lows in July 2010.  Intermediate trend is down.

Here is a 6 month Gold Silver ratio chart with a support line drawn from the April 2010 lows of just under 63. The ratio breached the support in early Sept this year.

Here is a 60 day Gold Silver ratio chart at the ~61.4 area. The short term trend is down. The next area of support is the 59 area based on the 2 year chart. This level needs to be pierced for Silver to get to the next level and possibly onto substantial new highs.

If you believe that the Gold Silver ratio will return to 'The Coinage act of 1792' proclamation, Silver may be an investment that should be considered.  The Act defined the proportional value of gold and silver as 15 units of pure silver to 1 unit of pure gold. Standard gold was defined as 11 parts pure gold to one part alloy composed of silver and copper. Standard silver was defined as 1485 parts pure silver to 179 parts copper alloy.

With the current price of Gold at $1280 an ounce, a 15/1 Gold Silver ratio would bring Silver to the price of ~ $85.33 and ounce. Hmm, you should have a very nice return on all of those Silver Eagles that you purchased when they were selling for $10 each.

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