The GSR is a worthless yardstick at the moment. We can look at historical ratios and try to extrapolate future performance from them (which is why people say silver has such a large potential upside), but... *shrug*

It's important to remember that only a few years ago, gold and silver prices were far below their current levels.

 

Yes, but a few years ago we had a lot less paper money. They are not going down unless we call all of that back in.

 

I don't put much stock in the GSR. For most of history it was fixed by governments so they could make silver coin with fixed value.

Silver coins are a great place to start buying PMs. Somewhere around a full $1000 bag (715 Troy oz = 55 lbs) it become difficult to carry your wealth around.

So most folks start out with silver, but those that stick with it usually switch over to gold.

 

We need a new currency...like this..

 

Ah yes, the currency of Crawfordistan. A most beautiful scrip.

 

10 bears where did you get that from?
i like it

 

He must go to places we dont go to.

 

The Coinage Act of 1792 legislated the gold to silver ratio at 15:1. It also stated that 10 silver coins would equal 1 gold coin. Each silver coin was to contain 371.25 grains of silver while a gold coin was to contain 247.5 grains of gold.

The important bit here is that this ratio was fixed through decree, it was not determined by the market. I'd be curious if any of you know of any other similar laws in history. In the current fiat world there is no political need to force this ratio onto the market.

 

You'd have to do some research there. All coinage was minted to serve some elite (non-democratic) ruling dynasty/government, so right off the bat you're not dealing with "free market" in any ordinary sense when speaking of coins (bullion is arguably a different matter). And evidently a much larger portion of pre-modern economies was conducted in bartering raw goods for goods.

Probably especially with copper/bronze coins you have a proto- paper/fiat thing going on. Those coins were presumably used mainly at "face" value, not weighed for their intrinsic bronze value. I could be mistaken, but that level of coinage was already debased very early on -- reduced basically to a low fiat value. Rome and other governments had plenty of forced laws (http://en.wikipedia.org/wiki/Roman_currency)

"Later, during the Roman Empire, there was a division in the authority of minting coins of particular metals. While numerous local authorities were allowed to mint bronze coins, no local authority was authorized to strike silver coins. On the authority to mint coins Dio Cassius writes, "None of the cities should be allowed to have its own separate coinage or a system of weights and measures; they should all be required to use ours." Only Rome itself struck precious metal coinage, and the mint was centralized in the city of Rome during the Republic and during the early centuries of the Empire."

One of the troubles with a non-fiat relationship between gold/silver is that it's quite difficult to conduct trade if both the goods themselves and the coinage are fluctuating, voyages take weeks/months, and there is no quick communication system of word-of-mouth to sensibly compute supply/availability. So the idea that coins (even silver + gold) have some early fiat aspects, and a fiat ratio to one another, is as old as coins themselves. It's all about Empire and the ruling dynasty. Again, raw gold or silver bullion is a different matter.

 

You can pick your time period and determine a ratio or use some sage.

Then you must determine which influences the other. In other words is one over bought or is the other over sold.

I am not giving any trading advice because I believe in investing not trading. Traders try to judge the emotions of the market. Emotions are not logical.

That is not to say that some traders do not make money but few avoid big crashes. If you do become a trader good luck.

 

I don't have any experience with trades personally, my stack is still pretty small for that but have found a ton of info on GSR trades over on the kitco forums. You might want to check there or one of the other PM forums. Seems to be a matter of scale, the more ounces you have the smaller the fluctuation you can act on. There are people out there that play the ratio back & forth within as little as a couple of points I'm sure although 5 points seems to be a common minimum from what I've noticed. Paper trades seems to be more common than trading physical PMs.

Hope that helps.