[e-gold-list] Re: Well, at last!

[Jim Davidson]

Dear Paul, 

Excellent news.  Jim Turk makes note of it in a recent commentary on
his GoldMoney.com site.

> Within the last couple of days, though, it's started marching up again.  At
> this writing, it's about 1.9% and climbing.  It wouldn't surprise me to see
> it pass the 2.0% mark again in the next day or two.  (If only I could figure
> out why!)

Why does the gold/silver ratio change?  I think we should expect it to
change dramatically in the next year or two, as the price of gold starts
to go ballistic.  Last time, in 1980, the gold to silver ratio went to
about 18 ounces of silver to buy one of gold, as I recall.  Right now,
as you note, it is about 50 ounces of silver to buy one of gold.

Some of the change is based on the tremendous increase in the
speculation portion of the gold price.  Part of it is due to
the fact that as gold gets very costly, people buy silver because
it is also a precious metal, but available for much less.

Of course, one of the reasons silver is much more price volatile
than gold is because of the nature of the two metals.  Gold is
not as available in as many places, nor in as politically stable
places, as silver is found.  Silver shows up in trace amounts in
ores that contain lots of other metals - lead, zinc, copper, etc.

In fact, a high price of silver is a blessing to many mining
companies because they have huge piles of tailings that were not
worth smelting for silver at $4 per ounce, but are worth refining
at $18 per ounce.

> Most people watch the US$ prices of gold and silver, but to my way of
> thinking those only tell you the price of the dollar, not the gold or
> silver.  But watching the interplay between gold and silver allows you to
> peek into the real values of the metals -- at least compared to each other
> -- which is a lot more meaningful in assessing how the market values them.

That's very true.

> I still consider Ted Butler's assessment to be where silver is going.  He
> claims that there is less refined silver available to the market than there
> is gold and that thus silver should be priced higher than gold.  Works for
> me!  Bring it on!

It is an interesting thought.  The trick is, how long does it take
to refine silver from a big pile of tailings already at the mine
head.  And, I think the answer is, not all that long.

Whereas with gold, a higher price promotes more exploration for new
gold, and it takes several years to bring a new discovery into
production where it would affect the price, with silver, at least
in the short run, there is often a substantial amount of unrefined
ore that becomes worth refining.  Where things stand with that
situation right now, I do not know.

Regards,

Jim
 http://indomitus.net/

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