Are you trying to increase your position in gold? Gold bugs are investors who believe in the value of hard assets like silver and gold. One of their investment goals is increasing their position in gold (or silver) at a minimal cost. You want to increase your position in either gold or silver and still invest in stocks, especially when stock markets are performing well. There’s a way that you can do both.
A strong gold position is always a safe bet, as it performs well when markets do poorly. But some savvy investors know how to increase their position by playing the gold-silver ratio.
How To Trade Gold And Silver
Trading gold and silver is based on the gold-silver ratio, i.e., how many ounces of silver you can buy with one ounce of gold. Historically, the ratio was around 15:1 until gold and silver were allowed to trade freely as commodities. Now the ratio fluctuates between 30 and 80.
Investors can take advantage of these extremes by trading one for the other when the ratio is in their favor. For example, when the ratio is 1:80, you can turn one ounce of gold into 80 ounces of silver. When silver is doing well and the ratio is 1:40, you can trade those same 80 ounces of silver in for 2 ounces of gold. It’s a simple strategy for increasing your wealth and your gold and silver investments. Watch for extremes in the gold-silver ratio.
An important part of trading gold and silver is staying on top of silver prices. You can get the most recent price of silver and find low-cost silver through online silver dealers. Silver prices change throughout the day, so stay up to date before making any trading decision.
How Gold-Silver Ratios Predict Price Booms
In the most recent commodity super-cycle of the 2000s, some fascinating patterns emerged in the gold-silver ratio. The ratio peaked in both 2003 and, most tellingly, in 2008, right before bull runs for both precious metals. The logic is that gold tends to lead the way and silver follows. The gold-silver ratio reaches an extreme when gold is taking off while silver lags behind. Once silver catches up and the ratio is very low, it can be a sign that gold is slowing down and silver is overvalued. It’s notoriously difficult to predict the gold and silver market, but these extreme moments in the ratio may be signposts for changes ahead.
A historical correction to the gold-silver ratio of 16:1 may not ever happen, at least not in the current economic climate, but the gold-silver ratio is still a valuable tool that investors can use to read the signs of the market and increase their positions in either gold or silver without investing more capital.
The safest way to invest in silver is with silver coins and silver bars. Don’t confuse silver bullion coins with collectible coins that come with high premiums. When you buy silver online from silver dealers like Silver Gold Bull, it’s crystal clear what you’re getting into. Don’t pay higher premiums than you have to. Especially when it comes to silver, Silver Gold Bull and other online silver dealers offer savings on premiums when you buy in bulk. Buy silver in larger quantities or trade gold and silver directly and use the gold-silver ratio to increase your positions in precious metals.