Gold : Silver ratio

[beekeeper]

Hi there,

great forum you have going on here and some really interested debates...

After thinking about it for quite some time I decided to put some money into gold and silver as an "insurance policy". Not really interested in as investment.

I already bought gold and silver coins ( Chinese Panda and Silver Vienna Philharmonic ).

Since I am new in this I would like to ask you to recommend me what ratio should I pursue in buying gold and silver. Should I go with 50:50 in weight or should I go 50:50 in value ?

Any thoughts on this would be appreciated.

[Caligula]

Some grizzled old-timer said once here that you should aquire your weight in silver, then move on to gold. :bull-buddy-icon:

However, take that advice with a grain of salt.....same guy's avatar is a hot french newscaster smoking out of a hooka.....:confused_ma:

[Saul Mine]

http://img87.imageshack.us/img87/59/600yearsofsilverpricesdn9.gif
SOURCE (http://goldinfo.net/silver600.html)

Study this chart of the gold/silver ratio. For the last century the ratio has swung between 45 and 100. Right now it is 62.

The idea is that when the ratio goes down, gold is cheap so you swap your silver for gold. When the ratio goes up, silver is cheap so you swap your gold for silver. The average for the last century has been 66, so we are in the middle right now. If you think the ratio will continue up you would want to hold gold. If you think the ratio will turn down again you would want to own silver. If you want to cover both possibilities you would hold 62 ounces of silver for every ounce of gold.

BTW some people think the ratio will go to the "natural" level between 12 and 20. The chart shows that the ratio has gone below 40 very briefly just three times in the last 120 years. Maybe it will happen, but what we know for sure right now does not support such a prediction.

[Sparky]

To answer your question: value.

And it needn't be 50:50. I would recommend a little more on the gold side, like 60-70%. If silver does end up being a home run, that 30-40% silver will do the work of a 50% share. If it falters, the extra gold portion will serve you well.

[beekeeper]

If I underatand correctly I should buy 20oz of silver on 1oz of gold and I am good ( Like the real ratio should be ).
Ah this is confusing but I am off to the bank to buy some Philharmonics :)

[eat_beef]

If it's strictly insurance, I'd say all gold.

That said, I'm not an insurance kind of guy, so I'm heavy silver.

I hadn't thought of it like Sparky put it, but as usual, he has a good point.