Swapping Gold for Silver Has Historical Merit

Precious metals investors are very much in tune to the silver to gold ratio. The ratio, which commonly trends between 20:1 to as high as 70:1, should be used as a guide to determine which precious metals will rally and when. Today, silver is at the top of the silver to gold ratio at just over 62:1, so according to history, those who swap their gold today will see higher appreciation in silver in the months and years that follow.

Swapping for Greater Appreciation

We’ll have to travel in time back to 2003 to find a time when the gold to silver ratio was even remotely close to where it is today. In 2003, the ratio peaked for the last time at nearly 80:1. Since that time, gold has risen from $320 per ounce to $1240 per ounce. Silver, on the other hand, has risen from $4.80 to more than $20 per ounce. Silver racked up a 416% gain in seven years while gold lagged, but still beat any other market with a 387% gain.

Going back even further to 1992, silver was selling for an average price of $4 per ounce while gold traded at right around $350. That puts the ratio at roughly an average of 85:1 throughout the year. From 1992 to 1998, when silver reached its recent average ratio to gold, silver soared as high as $7.80 per ounce. Gold, however, stayed moderately flat, advancing no more than 20% and ending the year of 1998 exactly where it began six years prior.

Hold on for 40-50:1

History is ripe with examples where silver, once it tops out on the silver to gold ratio at 70:1, goes on to outperform gold in the long run. Investors buying silver here at roughly 62:1 still have plenty of appreciation ahead of them, especially if gold continues to trudge a few dollars higher each month to test new highs. However, even without advancement in the price of gold, silver investors should prepare for prices as high as $28-34 per ounce before even beginning to ponder a switch back to gold from silver.

Of course, much of this methodology relies on the continuous advancement of silver prices. Luckily for silver investors, the big institutions are cutting back on their shorts (as a requirement of new laws and regulations concerning proprietary trading desks) and will not have the same stranglehold on the market that has persisted since the day gold and silver holdings were legalized.

Now more than ever, appreciation in silver bullion prices is only a matter of time, nearly guaranteed as a result of a changing market structure and a sky-high silver to gold ratio. When investment bank activity shutters for good in October, expect a surge in prices never before seen. Silver’s previous seasonal autumn runs will look like blips on the radar, and many investors are positioned well to become filthy rich on the climb. If you haven’t already, consider swapping a portion of your gold bullion holdings for physical silver, as history is on your side.

Buying Precious Metals—Is now the time?

Most investors know that investing in precious metals is a good idea. The question rarely arises as to whether or not one should invest in them; instead, what is often asked is “is now the right time to invest in gold and other precious metals?”

You would be hard pressed to find a time that isn’t right. In reality, it all depends on what your goals are. Gold has historically worked in yearly trends, and for the last decade, gold has appreciated in value at an amazing pace. Listed below are the yearly averages for gold in the last decade:

What this tells us is that the prospect of gold prices continuing to rise isn’t based on mere “speculation,” but rather it is based on historical precedent. Of course, just because gold is rising in price yearly doesn’t mean that there isn’t a smarter time to buy within each year.

For the investor looking for the right time to get into the market, the summer months tend to provide a significant enough dip in the spot price of gold, translating into a more dramatic pickup in the winter months.

By the same token, though, for the investor looking to own gold long term, buying at any point in the year would have represented sound timing. Sure, buying in the summer months may further your profit margin, but the reality is that if you’re holding this metal for three or even five years, you’re probably going to make respective returns anyway.

Gold continues to appreciate. The notion that gold and the economy are inversely proportional doesn’t always apply. In the last decade, the United States has seen economic growth as well as near economic collapse, yet gold has appreciated despite all this.

Now is the time, more than ever, to invest in gold. Call United Gold Group at (800) 488-3903, and ask to speak to one of our Senior Account Executives, who will be more than willing to help you get on the right track and provide you with the input necessary to make informed and profitable decisions.

The Consistent Performer

Fluctuations in any market are expected. Day-to-day traders are rarely, if ever, looking to make long term investments. Instead, they tend to be focused on small sums of instant gratification with the slight chance of a risky investment yielding a large profit. Your average, day-to-day trader fits the stock market structure very well—unfortunately, however, the stock market is just as volatile as the decision-making tends to be on the trader's behalf.

There is no formula. There is no consistency. No one can tell you that it cannot be profitable—but any rational person would inform you that it certainly isn't reliable as a medium for profitability. Let's face it: not everyone has the ridiculous amount of money readily available that is necessary to take the risk in the stock market and still be financially comfortable if the investment fails.

No one should ever put all of their eggs in one basket. Assuredly, any successful day-to-day trader has long term investments that they don’t liquidate for years, like gold. If you want to successfully diversify your portfolio and achieve long-term wealth that provides the potential to embark in riskier endeavors (which, by no means, is necessarily being advocated), it is imperative that one begins to take gold, silver, and other precious metals seriously as a powerful form of wealth protection.

Despite the constant fluctuations in the global market, by and large, gold has been very consistent. In fact, gold’s consistency and behavior has been somewhat unexpected to the “brightest” economic minds of the world. Earlier in June, Ben Bernanke—the current Chairman of the United States Federal Reserve—alleged that he didn’t “fully understand the movements in the gold price” and that “gold is out there doing something different from the rest of the commodity group.”

With all due respect to Mr. Bernanke, gold is no average commodity. It is money. While it had been previously following suit, inversely at times, with the performance of the economy as a whole, recent global crises have readjusted gold and the precious metals market as not only safe-haven investments, but as something more. The global realization of currencies needing to be backed by some valuable, finite asset is clearly happening.

This is no bandwagon. This isn’t a bubble. This is a global wakeup call to a crisis that has been brewing since the Nixon Shock of 1971. If you want more information about how to invest in gold and how to protect yourself and your family for the future, call United Gold Group at (800) 615-1513, and ask for a Senior Account Executive who will help get you on the right track.