HONG KONG GOLD UP $8 AND SILVER UP $.50

Forex ^ | 16 April 8:04 p.m. CST | Forex Staff

[shrinkermd]

Gold and silver on a tear overseas. Also, oil seems to be breaking $70 a barrel. Anticipating problems tomorrow or just commodities on an upswing?

[djf]

Historically, also, the gold/silver ratio is about 15 to one. So even if gold just stays where it is, that would mean 40 dollar silver.
If gold were to go to the inflation adjusted numbers, that means silver in the 120-140 range.

But it's just numbers. It may be that by the time that happens, TP is worth even more!

[simon says what]

Where is the FR economic discussion hit team ?

We need some good old fashioned gold buggery name calling to get this thread going. /sarc

[OkieDoke]

So that bald-headed gomer on TV ("Gold--Buy it!") wasn't just a-whistlin' Dixie.
I hoarded a lot of pre-`64 coins, then sold them for 9 times face-value in `82. Paid for my books & tuition.

[TEEHEE]

"BAHOG!" etc...

[sefarkas]

... it is still about half of what it was in 1980.

An old Apple computer of that era ran you a grand or two depending. By your logic, personal computers would cost $10-$15k instead of $300-$500. The price of gold recorded in the papers is the "marginal price of gold" which by its nature has to be volatile as the market seeks out the worth of gold to the most marginal user. A sudden rush of gold (or any commodity) into the market would rapidly depress the price you see in the papers until the market clears the available product. The market is working to maintain a relatively constant ratio between the price of gold and the price of a barrel of oil. The two move in tandem.

With the Federal Reserve raising interest rates to some of the highest in the G-7, the dollar become more attractive. The value of currency is set by the relative ratio of the government guaranteed riskless return of a bond denominated in that currency.

[cpdiii]

The market is working to maintain a relatively constant ratio between the price of gold and the price of a barrel of oil. The two move in tandem.

No they do not. Just a few years ago oil bottomed out at 7 dollars a barrel. Gold was about 275 dollars an ounce. Oil responds to free market forces of supply and demand and to a certain extent fear. Golds price is controlled mostly by fear. Commodities will rise as a group. Gold will also rise as a commodity but will also have wild swings in value based on fear in the market. When people are afraid, as now, it is a good investment.

[sefarkas]

The barrel of oil to ounce of gold ratio fluctuates from roughly 10 to roughly 30. The ratio helps normalize out the changing value of the dollar relative to other currencies. "Fear" is not a rational basis for making decisions concerning large investment positions.

[happydogx2]

Yeah, me too. Held it for almost 20 years. Also got some junk silver for around $4.00 an ounce. I was shocked that silver was at $12.86 last week as I hadn't been following the upswing on silver.

Some "experts" (invest at your own risk) think we are in for another 3-5 years of bullish prices on metals.

[BohDaThone]

Your claim of gold:silver having been "historically 15-1" doesn't seem right. William Jennings Bryan, in 1896, tried to make the Gov't fix it at 16-1, because there was lots of silver, in the sense that the real price was about 40-1, so that declaring, by fiat, that silver was worth 1/16 of gold, at a time of gold standard, was the equivalent of printing money!

I don't have the charts at my fingertips, but I'm sure someone does. Over the last 10 years, until very recently, gold was $200-400/oz, and I think silver was $2-5. The old, "fixed" price, from 1933-c.1975 was $35 for gold and $1.29 for silver, or about 30-1.

It is true that at the top of the speculative bubble in 1979-80, Gold was 850 and silver almost 50, or close to 16-1, but Silver ws much more "bubbled", and fell much faster, so the ratio grew back towards 30-1 or so.

I'm not saying that there is any "right" ratio (in fact, I would say that there isn't), but I think that the times when a free market price of silver was as much as 1/16 that of gold have been pretty rare -- but I'm sure someone has the charts with real answer.

[cpdiii]

"Fear" is not a rational basis for making decisions concerning large investment positions.

You are correct and that is why I am not in the commodities market any more. I made considerable money in it in the early 80s. One day I lost 8000 dollars in an afternoon, actually between 130 pm and market close in Chicago. I was still far ahead in the game and decided it was not a rational game. Would I invest in commodities today? Yes I would, but only in the companies that produce them, the futures market is not for the faint of heart. Would I invest in gold and oil? No.

[simon says what]

I don't have the charts at my fingertips, but I'm sure someone does. Over the last 10 years, until very recently, gold was $200-400/oz, and I think silver was $2-5.

Weekly Gold/Silver Ratio for the past 25 years.

[Proud_USA_Republican]

Oil and gold traders are hedging their bets on wether the US will bomb the Iran nuclear facilities this year.

[BohDaThone]

Couldn't get your link to work, but This one:

http://www.sharelynx.com/charts/AuAG.gif

shows ratio below (gold above) 25-1 since 1976, except for the brief bubble in 1980, when it reached 16-1.

I found another chart, purporting to show prices back to 1400, which showed a ratio around 15 or 20-1, UP TO ABOUT 1824, after which gold has been almost always at 20-1, up to nearly 100-1, as I read that chart.

[BohDaThone]

And THIS table:

http://www.eh.net/hmit/goldprice/answer.php

if you run it for 1776 to 1998, shows the ratio around 16-1 until the 1880s, after which it stays above 20-1, almost all the time, and reaches into the 90-1 area at some times.

[guitfiddlist]

Relax folks. By the time New York gets online, it'll drop again below $600, as wise and prudent spokesmen in the US and UK bring sanity back to the markets inflamed by know-nothing Asian PM buyers, and they will again tout the wonderful health and vitality of US real estate, general equities, derivatives and bonds.

So wise are our Central Bankers that they no longer need to report M3. The people trust them to maintain endless liquidity, and overcome all manner of economic unpleasantness. So, please stay away from gold and silver.

(Full Disclosure: I haven't bought enough yet, and wanna buy a heckuva lot more - before they go parabolic).

[spanalot]

oil and gold is running up because of oil country saber rattling.

But inventories are high - high enough to take a hit from the loss of Iran. Don't forget, Canada has become the largest supplier to the US.

http://www.gulf-times.com/site/topics/article.asp?cu_no=2&item_no=82189&version=1&template_id=48&parent_id=28

[guitfiddlist]

oil and gold is running up because of oil country saber rattling.

Among other things - but certainly you are right, that the near term acceleration is due to geopolitical oil worries.

However, I am long on PM's because I think the economic fundamentals of our nation our way out of whack - and it only will take a good sharp whack from any quarter to reveal it. This significant jump is a bit worrying for me - since I plan to jump in with both feet when I have the financial wherewithal - and at the moment...I don't.

Nobody has a crystal ball - and I certainly don't castigate others who hold other prognostications. But there are times when you've got to lay your money on the table according to what you truly believe, and this is certainly one of them.

[bert]

....Problem is the shorts are so exposed, they're gonna get killed.....

Do you think there are many precious metals shorts?
.

[bert]

....so that $850 then = $1900-$2200 now -- so we are at or under 1/3 of the 1980 high!.....

I'll see your $1,000 gold and raise double

Ha Ha Ha made my morning....... now I watch and hope you're right. Maybe I need to raise my sell stop.

[bert]

.....TP is worth even more! .....

Not to worry, I saw a TV piece on Japanese toilets that cost $4,000 but but pamper your rear end with all sorts of luxuries eliminating the need for TP.