What is next for Gold & Silver? (obsolute prices now removed)

Discussion in 'Business & Economics' started by Billy T, Dec 5, 2009.


Where is Gold price going next? (give why in post)

Poll closed Nov 30, 2010.
  1. To $1100/oz and then to $1000/oz before back to $1200/oz

    4 vote(s)
  2. To $1100/oz and then back to $1200/oz before $1000/oz

    4 vote(s)
  3. To $1300/oz and then back to $1200/oz before $1400/oz

    0 vote(s)
  4. To $1300/oz and then to $1400/oz before back to $1300/oz

    5 vote(s)
  1. Pinwheel Banned Banned

    So far so good...
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  3. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Bloomberg futures data at CoB -1 hr: Gold at 1430.00 & Silver at 34.495 for ratio of 41.46, still falling as silver climbs faster than gold in value.
    Gold closed at 1431.20 & silver at 34.69 for a ratio of 41.26; but look at that green curve climb compared to the climbing red curve of yesterday.

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    The "short squeeze" I discussed in post 159 seems to be happening as the most pure silver miner, Hecla, HL, fell significantly since it Monday opening high of 11.08 to today close of 10.28 as silver climbed. HL hit a low of 9.74 near end of day on Monday so has been recovering. I think that Monday was the day they had to full cover their presumed short (against future production) position and some thought it would be more expensive than it seems to have been based on today's recovery. Read post 159 again if this not clear. Basically, I think HL sold silver they will soon produce with nice "locked in" profit, but probably not as much profit as if they had sold it later when produced. I am just guessing - don't know that HL had a short position. I am just "back engineering" from prices to get the "what happened."
    Last edited by a moderator: Mar 1, 2011
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  5. Michael 歌舞伎 Valued Senior Member

    Wow! 20% - great job!

    I bough pretty heavily (yuck yuck yuck ...) too, not 20%, but if it goes up to 130 I'll be happy enough

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  7. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Silver is still rising -looks like it go well above $35/oz today. At 11:49 NY Time it was 34.95, after climbing nearly 50 cents in last 12 hours.

    I don't know why, but the graph in post 162 seems to be self-updating. It now (11:53) tells price as 34.99

    By edit 2 days later (late on4March11): The 34.99/oz was that days peak - 35.00 was a "resistance level" but boy did it bust thru today!

    Silver closed at 35.67 and gold at 1432.80 for a ratio of only 40.17

    I.e. silver is leaving gold in its dust as a percent gainer. As I sent my browser to kitco.com again at 8:23PM NY time, the "live chart" in post 162 updated to show the $35.67/oz price which is still climbing rapidly as you can see in post 162. Could it be that China is buying? as I predicted they would at end of post 155 and earlier here:
    As I noted in the (corrected) post 115, each Chinese buying only one tiny 20gm silver panda per year, on average, would be a demand in excess of total global production, which is already significantly exceeded by current demand! If China has started to buy, then:
    It won't be long before the ratio drops to 20 or at least silver costs more than $75/oz, I think.
    Last edited by a moderator: Mar 5, 2011
  8. Pinwheel Banned Banned

    Yeah thats a live chart, it will refresh when your browser refreshes the page.
  9. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... Until the last 2-3 years, monetary silver investment has been less than zero, due to silver coin melting and other recycling making up the industrial deficit. Yet, the shortfall is unsustainable at current silver prices, because silver in electronics often cannot be recycled economically, so it is simply thrown away. Also, every time the US military explodes a smart bomb, 100’s of ounces of silver are vaporized.

    Vast stockpiles of silver accumulated over many centuries have now been “consumed” in the last few decades, and it is unclear how much is left. For example, after World War II ended the US Government had stockpiled billions of ounces of silver. As of 2002, this stockpile is completely gone, as are all other official world government stockpiles. In many expert opinions, at least 80% of all silver mined in history is now gone, unrecoverable by any means, while at least 80% of all gold probably remains.

    So, the current ratio of existing silver to existing gold is probably more like 5:1, and not 10:1. On top of this, most of the remaining silver exists in things like jewelry, silverware, or coins. Therefore, in regards to world bullion stockpiles the 5:1 ratio is flipped, with gold bullion actually being around 5 times more plentiful than silver bullion. So, we now have a price ratio of 39:1, but an availability ratio at current prices of 1:5. In this light, remember that silver (not gold) is the metal that is indispensable for modern society. ..."

    From: http://seekingalpha.com/article/256...er-ratio-to-determine-precious-metals-outlook Where there are several interesting graphs near article end.
  10. Pinwheel Banned Banned

    Gold/Silver ratio crosses sub 40 to ~39.
    This added by Billy T to avoid new post: just saw in Bloomberg TV streamer: silver is $36.06/oz
    Last edited by a moderator: Mar 7, 2011
  11. Michael 歌舞伎 Valued Senior Member

    Just saw silver was 36.71 before dropping way down to 35.58.
  12. Pinwheel Banned Banned

    Here are the Gold and Silver charts for the past 5 years. Silver really playing catch-up right now.

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  13. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Bank savings accounts in China pay negative real interest. Thus, are increasingly less used. China has a serious inflation problem and would like to have some of the circulating money taken out of circulation. Thus in December 2010, for first time, ordinary Chinese were allowed to open “gold saving accounts” in banks. More than 1 million Chinese have opened them in less than three months, buying 12 tons of gold, produced in China, world’s largest producer of gold.
    In only two months China has purchased {from its mines, etc} 200 metric tons of gold, which is 40% of the purchase in ALL of 2010.
    (This implies 500 metric tons of Chinese gold production in 2010.)

    Facts above from Jim Jubak's less than 3 minute long video at http://www.moneyshow.com/video/video.asp?wid=6784&t=3&scode=015362
    Watch it for discussion of 2nd reason to expect gold price to only go up (except for minor daily fluxuations).

    At this rate of Chinese hording of gold, (100 metric tons/ month) Billy T thinks China will need to buy and import 100s of tons of gold in 2011.* It is certainly true China has the dollars to do so and that China for a several years has been spending dollars for real assets, especially assets like oil and gold that will be much more costly / valuable / a decade from now. For example, about three years ago China gave Brazil’s PetroBras 10 billion dollars, which will be paid back over 20 years by the delivery of 200,000 barrels of oil each day, (on average). I calculated that the price China paid was less than $50/ brl, but forget the exact price. Also, as PertoBras got all the funds immediately, but on average will deliver the oil with 10 years of delay, the “time value of money,” makes this more like $100/brl, the current price, but oil will probably be well north of $300/brl before the last barrel is delivered.

    In 2009 China was able to spend its reserves down by 100billion dollars by buying real assets, but has not been able to do that recently. It thus now looks like that China will swap dollars in reserves for gold and silver. For more than a year China has been encouraging its population to hold silver as that too take money out of circulation to reduce inflation pressures. See picture of the nicely packaged, 20gm** “Panda Bars” China is selling to its population at: http://www.sciforums.com/showpost.php?p=2643758&postcount=115
    Note also that if each Chinese, on average, buys only just one 20gm Panda Bar per year, that is a demand in excess of total global production, which is already exceed by the industrial demand! – No wonder the price of silver has climbing much more rapidly than gold for more than a year, but if it is true that China has started to buy gold on the open market, (to reduce dollars held in its reserves) the advantage of silver to gold as an investment may disappear as both surge rapidly upwards in price.

    *India and a few others who fear dollars in reserves will lose more value probably will be buying and importing at least 100 tons/ per year too.
    **20gm is less than 2/3 of an ounce of silver or about $22 now. Many Chinese can afford dozens and some none.

    Note 32150 troy ounces = 1 metric ton so 12 tons at $1430/oz is:
    32150x12x1430 = 551,694,000 dollars or on average, the new gold accounts had ~550 dollars in value deposited, but it will grow with the price of gold.

    More on China's switch from silver exporter to importer:
    "... In 2005, China was a net exporter of nearly 3,000 tonnes of silver. Last year, in 2010, China was a net importer of more than 3,500 tonnes of silver. Incredibly, Chinese net imports of silver surged four fold in just one year from 2009 to 2010. We fully expect this growth of demand from that source to continue in 2011 and possible for the next decade.
    Demand for silver in China has risen sharply in recent months and years. Growing middle classes and savers in China, India and other Asian countries have been turning to “poor man’s gold” and using silver as a store of value. ..."

    From: http://news.silverseek.com/SilverSeek/1299722400.php

    By edit late on Friday 11March: Gold at 1421.80 & silver at 35.935 for a ratio of 39.566
    By edit late on Tuesday 15March: Gold at 1396.50 & silver at 34.370 for a ratio of 40.631-Back above 40 mainly as silver has industrial demand, which may be decreased by quake in Japan. My prediction, made with ratio >48, that ratio would never go back above 50 looks safe still.
    Last edited by a moderator: Mar 15, 2011
  14. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Gold/silver ratio is back below 40 at 39.361, if I have not already said so, I expect it to go to 35 this year.

    I bet we are less than one month from "Crossing Day." I.e. the day when price of silver (now going up) climbs above the gold silver ratio (now going down).
    Last edited by a moderator: Mar 23, 2011
  15. Pinwheel Banned Banned

    Ratio is further down to 38.7 now...it could go down to 32 by May.

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    Billy T inserts: Silver up 1.4%. Closed $36.78 on the Comex, after touching $36.835
    Last edited by a moderator: Mar 23, 2011
  16. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Today was first "crossing day"
    I.e. price of silver, now 38.065 is greater than the gold silver ratio, 37.99 as I post.
    At NYSE close (or a few hours later) Siver was only 37.16 and ratio higher to 38.49 so the cross was reversed (Ratio > price).
    Last edited by a moderator: Mar 24, 2011
  17. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    Text that followed the following 10 facts (an my comments) is at: http://www.sciforums.com/showpost.php?p=2718106&postcount=382

    "...Most Americans simply don't understand how big of a player China has become when it comes to precious metals. China is not only gobbling up gold, it is also voraciously buying up silver as well. The following are 10 facts about gold fever in China that may surprise you....

    #1 According to the World Gold Council, China consumed 579.5 tons of gold during 2010. The United States only consumed 233.3 tons.

    #2 China has been importing gold at a feverish pace. In fact, China imported five times as much gold in 2010 as it did during 2009.

    #3 The Chinese appetite for gold only seems to be accelerating in 2011. The Industrial and Commercial Bank of China sold approximately 15 tons of physical gold in 2010. That was a huge amount. But during the month of January alone, the bank sold approximately 7 tons of physical gold. The growth in the demand for gold in 2011 is being called "explosive" by executives at the bank.

    {Billy T insert: See post 170 about the new "gold holding" bank accounts"}

    #4 Chinese demand for gold has now risen to approximately 25% of total global production.

    #5 Investment demand for gold in China soared by a whopping 70 percent during 2010.

    #6 It is being projected that China’s gold investment demand will grow another 40 to 50 percent during 2011.

    #7 Consumers in China and India now account for more than half of all global demand for gold jewelry and gold coins.

    #8 Chinese households have purchased almost half as much gold since mid-2007 as all the investors in the West combined.

    #9 On the Shanghai Gold Exchange, trading volume soared 43 percent during the first 10 months of 2010.

    #10 China replaced South Africa as the number one gold producer in the world back in 2007. China's gold mines produced an all-time record 340 tons of gold last year. ..."

    From: http://endoftheamericandream.com/ar...out-gold-fever-in-china-that-may-surprise-you
  18. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    More on Soaring Asian demand for gold and silver:

    "...The Chinese are starting to panic about their lack of gold reserves and currency's hard-asset backing, so they're buying gold. Among their populations, demand for gold and silver bullion is exploding. Investors in China and India have never trusted paper investments as a store of value. They're busy converting their hard-earned paper money into gold and silver bullion. ..."

    From: http://www.theaustralian.com.au/bus...the-bullion-boom/story-e6frgac6-1226028224949

    PS that is the Australian WSJ. (Owned and controlled by WSJ, I think, or at least owned and controlled by the owners of the WSJ.)

    NEXT DAY BY EDIT: "...An ounce of gold bought as little as 37.73 ounces of silver in London today, the lowest level since October 1983, data compiled by Bloomberg show. Silver industrial demand may climb to a record 665.9 million ounces in 2015, from 487.4 million ounces last year, the Silver Institute and researcher GFMS Ltd. said in a report this week. Silver is used more in industry than gold. ..." From: http://www.businessweek.com/news/20...rk-on-libya-conflict-europe-debt-concern.html

    I.e. the gold/silver ratio is 37.73 and silver price is just below that. - Expect an new "crossing day" soon as price climbs above the ratio.

    Edit on early AM of 6 April: "... Immediate-delivery {gold} bullion increased as much as 0.2 percent to a record $1,459.07. Silver for immediate delivery was little changed at $39.3075 an ounce after reaching $39.5013, the highest price since Feb. 11, 1980. ..."
    From: http://noir.bloomberg.com/apps/news?pid=20601087&sid=amHWFxrsowvA&pos=2
    Thus the ratio is 37.119 and Silver is more than two dollars higher per oz. I.e. firmly has crossed above the ratio now - probably never to fall below it again, but China's rapid increase in buying gold may make gold may increase the ratio to ~40 again without silver climbing that much, so this is not a "prediction" -just my expectation that silver will never cost less per ounce than the gold/silver ratio again.
    Last edited by a moderator: Apr 6, 2011
  19. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "... The Arca Gold Bugs Index , which tracks 16 of the world's largest bullion miners, broke through the 600-point mark *-- it last
    peaked at 598.36 in December 2010. Spot gold was bid at $1,460.01 an ounce, having hit an all-time high of $1,460.60 earlier in the day. Gold has rallied more than 8 percent in the past two months. Spot silver hit a 31-year peak of $39.68 an ounce on Wednesday. ..." From:C. Schwab's AM Email report to me.

    * A strong psychological resistance level, never crossed before.

    Billy T comment:As peaks tend to offer some resistance I will use both $1460.60 & $39.68 to calculate the ratio = 36.809, which means silver is now almost $3 above the "crossing point." I.e. ratio < price by $3. Thus I will convert my prior "expectation" that silver will never again cross back to the low side into a very risky prediction.

    A very risky prediction as a surge in China's buying of gold is not unexpected as the dollar steadily loses value. -They don't want to get stuck holding to big a bag of dollars, and it is hard to spend their reserves quickly without overpaying for the real assets they are buying. (16 billion dollars for farm land and new soy to oil processing plants, rail lines and port in Brazil in the last month alone is a "steep price" but will probably prove to be a bargain in the long run as food prices soar for others, but not so much for China, producing its own in Brazil.

    Their 10 billion given to PetroBras a few years ago for 200,000brl/day average for 20 years, (< $50/Brl but paid in full up front so "time value of money" makes effective price paid higher) certainly has turned out to be a bargain now that oil is > $100/brl.) China is a very smart buyer of real goods it will need and paying for them with decreasing value paper.
    Last edited by a moderator: Apr 7, 2011
  20. Pinwheel Banned Banned

    Silver has now passed the $40 mark. Current G/S ratio stands at 36.5 with Gold at $1466.20 and Silver at $40.19.
  21. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member


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    article graph is from said ratio went below 35.

    I predicted that many posts back, but thought it would be late this year at the earliest. Note less than a year ago the ratio was > 70!

    Any one think the historic 16 : 1 ratio will come to be in next five years?
  22. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    With sales staff like this, no wonder silver is more popular than gold:

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  23. Billy T Use Sugar Cane Alcohol car Fuel Valued Senior Member

    "MUMBAI Gold and silver prices galloped to climb another historic high at the bullion bourses here on Friday on frantic speculative and stockists driven buying bolstered by surging international markets. ... Spot gold was bid at USD 1,477.50 an ounce in early trade as against USD 1,472.90 yesterday. ... Silver was bid at USD 42.56 an ounce ..."

    From: http://economictimes.indiatimes.com...peaks-on-global-surge/articleshow/7991153.cms

    That is a Gold/Silver ratio of 34.72 and the Indian market's close for 15 April 11.
    If gold were $1500 & Silver were $45 that ratio would be 33&1/3 Both quite probable by end of the month or during the next month anyway.

    later by edit: Slightly different values from close in NYC:
    " “… While spot gold’s push to a new record high of $1,479.44 a troy ounce was greeted by a nonchalant yawn by some market players Friday, silver’s ascent to $42.710/oz—its highest price for a little over three decades—reignited a debate over the future prospects of gray metal ...”

    From: http://blogs.wsj.com/source/2011/04/15/silver-nabs-golds-crown/?mod=google_news_blog

    1,479.44 / 42.710 = 34.638 Both slightly higher but the only interesting point is the ratio slightly decreased more in the few hours after Indian market closed.
    Last edited by a moderator: Apr 17, 2011

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