Buying Silver to Get Gold – Does the GSR Make Sense?

Will silver ever correct to historical Gold ratios I don't know what that is 50 To 1 15 to 1. this is what 15 to 1 would Look like And this is what some people are Suggesting that GSR will revert to So is that going to happen there's two Answers here The Logical answer Is no the popular answer is Anything's possible So I started buying silver in 2008 Really kind of enjoyed it physical stuff Was interesting to me for a few reasons But it wasn't about quick profits I Didn't even think of it as a growth Asset really until 2011. price really started shoot up and That was a lot of fun I clearly remember Thinking just how much my silver was Worth all of a sudden I remember going Into the local shop to buy more And each time I'd go in the price was Noticeably higher I didn't really like That part but when a single Silver Eagle Hit 35 I tapped out I figured that I was Maybe too late at that point now this Was a different time the premiums on Silver Eagles were about 20 percent max So it's not like today when 35 Eagles Would feel like a holiday sale So we have the benefit of hindsight Today we all know what happened in 2011 Silver climbed to 49.50 it was a gain of 175 percent in that year alone it took

Gold another four months to start its Run to take off after silver went crazy So the gold the silver ratio was Momentarily 32-1 we also know they Didn't stick around by late 2013 silver Was back below 20 an ounce and we Haven't seen a gold to Silver ratio Anywhere near that tight anytime since Today stands around 88 to 1. now on the Other side of things we've seen that Ratio get as high as 114 to one and that Happened in 2020 and if you could get Both gold and silver for spot you made That trade from gold to Silver then you Waited a while traded back again you Would have an extra 25 ounces of silver More than you would have had had you Just bought it directly and that's the Dream or at least half the dream if your Final goal is to end up in gold Now the problem that I've mentioned here A few times is that none of us are able To broker a trade that avoids premiums Local dealer will almost always handle a Tradus to transactions you'll have a Purchase and a sale they will give you Very little premium for their purchase And they'll charge you going rate for The sale kind of takes the fun out of it Now the dealer gives you spot for the Gold they charge you 20 for the silver You get 95 ounces of silver for that one Ounce of gold that's rather than 115 Like we were just talking about and if

You trade it back at a ratio of 88 to 1 Which is where we're at today you'd get Spot for your silver you pay five Percent for the gold so it would take 92 Maybe 93 ounces of silver to trade back So if we're keeping track of that math We've only gained two ounces of silver Rather than the 25 ounces we were just Hoping for So that's the basic rub to make a Successful gold the silver trade you're Going to have to do better than that you Need to find silver for much lower Premium and you need to watch that ratio Very closely you need to be quick if it Happens that gold to Silver ratio of 114 To one that has only happened one time Since 1915 and it did not last long the 32-1 that didn't last long either so These aren't recurring themes they're Extremely unlikely events that none of Us expected So these numbers that I've been looking At we're looking at historical Performance here I see people suggesting Silver is the better buy than gold Because it's the more undervalued of the Two now if we stopped right there I Would probably agree hardstop I think Silver is undervalued it hasn't made Much sense to me for the past 10 years Or so I just don't get why we're still Battling twenty dollars with silver Price we hear over and over how

Important it is for industrial use but The price that we see just doesn't Represent a high demand commodity we see People suggest a lot at least a lot in These comments in this small space that They can buy silver at a high ratio like 88 to 1 and then they can trade it when Silver corrects to historical levels and I've seen those same people suggest that Historical levels are 15 to 1 or 16 to 1. and to get there you have to go way Back to fixed ratio times in 1834 the United States fixed the ratio at 16 to 1. that meant 16 ounces of silver would Get you one ounce of gold it was later Changed to 15 to 1. so if you're new to This whole thing and you're influenced By what you hear here and what you see In the comments well that ratio it's Long gone that way of life long gone the Gold standard has been gone for 90 years Fixed prices on gold and silver have Been gone for 45. so if we're looking For historical guidance we can't go back Very far we can really only go back 40 Years or so there were just too many Factors that simply don't exist today Now if we do watch historical Trends Well the gold to Silver ratio has been Trending higher not lower so if you buy Silver in the hopes that the ratio is Going lower well you're fighting a Pretty clear Trend starting with its Move from that fixed 16 to 1. fast

Forward to the 90s it was around 50 to 1. you go into the 2000 sixty to one and We've been trending up past 80 to 1 Since 2013. so what kind of event could Get it to retrace to 50 to 1 like we Were seeing 30 years ago or 15 to 1 that We were seeing a century ago hard to say But if it did happen and we're just Going to ignore the 15 to 1 that's just Silly look in the 50s if it did happen And you were buying silver today instead Of gold with the hope of later trading It and we did see that ratio shrink from 88 to 1 to say 58 to one that would net You an extra 30 ounces of silver if There was no such thing as premiums but There are so a 20 premium on Silver Would knock down 30 to 18. it cuts out 40 percent of the profit still pretty Good if you can get it The question again though is will this Ever happen and I don't like to answer Questions with questions but my question Here would be why why would it what Would cause silver to rise on its own While gold didn't is it industrial use Have we seen Silver's price rise over The past 10 years based on new Industrial uses not really Now silver really doesn't have to climb That far to get to 58-1 with gold at 1820 silver would only have to be a bit Over 31 dollars to make that ratio 58 to 1. but getting gold to stay where it's

At would be the trick On my conclusion here is that if we're Going to reference historical trends for The gold to Silver ratio it's widening It's not closing we talk about Metals Being a long-term hold and a long-term Trend on that ratio it's pretty clear It's only a human spin that tells us That history would tell us anything Other than that and it's interesting to Me that if you were to Google gold to Silver ratio a lot of the Articles Written about this idea that the ratio Is historically high and that it could Reverse course they've been written by Gold and silver dealers why would a Dealer want you thinking about this GSR Trade idea well that one's pretty easy Bullion dealers charge considerably Higher premiums on Silver than they do On gold and if I was a dealer I'd want To push the one with considerably higher Profit margins too Now if you're looking purely at Silver Being undervalued you might be onto Something I couldn't say I do think it's Strange that silver has never really Sustained a meaningful run on price That's one variable maybe it's due for a Win But when you overlay the idea that it's Undervalued compared to Gold then you Have two uncontrollable unpredictable Variables in play silver has to go up

While gold stays put or gold has to go Down while silver stays put it has to go Right in both cases at the same time now If you think predicting the price of Gold and silver is tough while Predicting the price of gold relative to Silver is twice as hard So if it wasn't clear there I don't Think playing the gold to Silver ratio Is a good strategy it's not really a Strategy at all it's making a two-part Bet paying a premium to make it and then Hoping you hit that's my take on it Anyway I do feel silver is undervalued But I felt that way for a decade we've Definitely been hearing about it that Whole time and I wouldn't bet that Silver will surge while gold stays still Now if you already have silver and You're waiting to trade it to Gold I Think that that's different I've traded Off most of my silver someone to Gold so Technically that would have been a GSR Trade some went to crypto I did fine With it now if you're not worried about The premium that you've already sunk Into silver or you just got a fantastic Deal on it you're in a pretty good place Just watch the ratio it does fluctuate There's no doubt of that My advice would simply be to not come Into silver for the purpose of flipping It to Gold that's just a tough game the Only people giving the advice to do that

To buy silver to play the ratio game are Either selling silver or maybe they Already have a lot of it already maybe They're just trying to convince Themselves it's a good idea As always though it's just my take yours Might be different so let us know what You think hit us up in the comments and While you're there hit the like button Be sure you're subscribed for more on The topic and if you're still here Thanks again for watching always Appreciate your time Take care [Music]