The GSR, choice, and balance..
Silver had a decent gain last night taking the Gold Silver Ratio back down to 77:1. But this week we saw the GSR hit 80. That is the highest it’s been when it peaked just before shares took their final GFC plunge at the beginning of 2009. We’ve written before about what a screaming buy signal this is for silver so we won’t go over it again (but you should read if you haven’t!). We were however reminded again this morning with Bix Weir’s email to subscribers simply stating:
“I've said it a million times and now is one of the best times in history to actually DO IT!
SWAP ALL YOUR PHYSICAL GOLD FOR PHYSICAL SILVER!!!
The Silver-Gold Ratio is close to 80-1...when it should be 5-1 or lower!!!”
We believe you should have a mix, to be honest, there are no certainties in life and that is probably a core reason you are buying gold and silver in the first place – to balance your wealth. A balance within the precious metals sector may be wise too.
Whilst gold and silver generally follow a similar pattern, that wildly (over many years) oscillating GSR means at any time one will be better ‘value’ than the other. We’ve had a number of clients being forced to sell some of their gold and silver this week due to margin calls on their shares. This highlights you don’t always get to ‘choose’ when you sell so you don’t know which metal will be ‘up’ at that time. Those selling their gold were much happier than those selling their silver, and those who had the choice were happier again…. SMSF purchasers too need to consider the pension phase and needing to sell down their holdings in the market that coincides with. We all remember visions of weeping pensioners (well those without gold and silver) after the GFC seeing their wealth smashed by the shares crashing.
So yes the case for going “all in” as Bix Weir would recommend looks compelling just consider the above before you swap ALL your gold for silver...