Wednesday, August 24, 2011

The Case for the 1:1 Gold to Silver Ratio

Our friends at Dont-Tread-On.Me have compiled a list of 11 reasons why silver is headed to parity with gold.
As we have indicated numerous times that we expect the silver/gold ratio to reach a MINIMUM of 5:1 by the end of the bull market, and potentially temporarily reach 1:1, this is obviously a must read for our readers.

1. The historical monetary ratio of gold to silver is 1:16 to 1:12, which means that silver should rise 200%+ faster than gold.
2. The natural mining ratio coming out of the Earth of gold to silver is 1:10, which means that silver should rise 350% faster than gold.
3. The ratio of gold to silver at the CRIMEX is 1:9. There is 11,575,304 ounces in total registered and eligible Gold holdings and 105,694,470 ounces in total registered and eligible silver holdings. (In late 2008 there was approximately 3,000,000 ounces of Registered gold at the CRIMEX and 85,000,000 ounces of registered silver, that was a 1:28 GSR back then.)
4. If we understand that all of the gold ever mined has been treasured by humanity as a truly precious metal, while silver has  been used and abused as an industrial metal, this Gold to Silver ratio must be lower than either of the above ratios. Most silver is used in such small quantities that it is uneconomical to try to recycle a few grams out of an old cell phone.
5. All of the major stockpiles of silver that all of humanity ever mined are gone. The US government had 5 billion ounces of silver in 1950. Only 29 million ounces in the Registered vaults of the CRIMEX.
9. There is already a 1:1 ratio of dollars invested in gold and silver in Sprott Asset Management , GoldMoney and the US Mint. The 1:43 ratio we currently have cannot sustain that much of a dollar demand difference, without coming closer to 1:1.
“For the first time in history, silver coin, of the leading nations of Europe sold at a higher price than gold coin. This of course does not mean that silver is more valuable than gold, merely a silver dollar or shilling is worth more than a gold dollar or shilling.”
Silver the World Sensation in 1919-1920
January 24th, 1920

Read Silver Shield's entire Case for the 1:1 Silver/Gold Ratio here: