Monday, August 4, 2008

How Undervalued is Silver Compared to Gold?

A few things to consider when thinking about investing in Silver or Gold. Silver is way under valued compared to gold. First lets look at the silver to gold ratio. On average over the last 6 months the ratio has been 52:1. In other words it takes 52 oz of silver to purchase 1 oz of gold. The US mint calls it 50:1. On their one ounce silver coin is stamped "one dollar" and on their one ounce gold coin is stamped "fifty dollars". This alone is a huge deception! Now look at the actual physical supply of gold and silver in existence today. It is 17:1; this means for every oz of gold that exists there is 17 oz of silver. Now lets look at the highs of the 80's. Gold reached $850 per oz and silver reached $49.50. This is a 17:1 ratio. Now look at the current gold price of $910 an oz. This means silver should be $53.53; but it is not. The current price of silver is only $17.50. What an awsome deal!!! I highly recommend buying silver right now!

Posted by Eric Malachowski of Project Liberty


  1. Hey Eric,

    I concur, but, there again, the question is Which Metal is in the drivers seat.. Does Gold drive Silver, or does Silver drive Gold.

    I would say that although silver is a depleting metal, in industry, that it's price is more driven as "a commodity", where Gold on the other hand is much more speculative.

    Therefore, I'd say, that silver is less driven by speculators and conspiracy theorists, than gold.

    Therefore, I'd say that the price of silver is the "real driver" and not necessarily gold.

    Therefore, put a 17:1 ratio, but base it on the price of silver as the driver, and that puts the price of gold at $297/oz.

    But, now that things are settelling down in the markets, and the shake outs are at least known and not "shocking" the market on a daily basis, as things have been over the last several months, then I think the more historic ratio is going to come back into the marketplace.. ie. 50:1

    In that case, with silver at $17.5 gold should be about $875... taaadaaaahhhh

    Good luck..

  2. Eric gave a presentation about this at the Master Mind Group tonight, Thurs. Aug 7th from 6 to 8 p.m.

    what are some more reasons for buying silver? Go to the following link:

  3. The anonymous poster's comments bear some thought as nobody (that I've seen) has ever established a "cause and effect" (causal) relationship between the two prices.

    I have both gold and silver, and look at them independently until somebody can establish a causal relationship between the two. If there is a truly causal relationship, that'd be useful information.

  4. Hi Rithban,

    The relationship that I know of between Gold and Silver is more philosophical than anything else.

    Both metals are regarded as "gods metals" both metals are regarded by the founding fathers as essential to sound money policies.

    Both metals for thousands of years have served as tokens of exchange, and "stores of value."

    One difference is that gold was widely used as adornment and "jewelry" in ancient civilizations.

    Those are a few of the relationships that I'm aware of.



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