Friday, November 27, 2009
Silver is a better investment than Gold
Recently many of my readers have been asking, "Why is silver lagging gold?"
After all, in March, 2008, gold hit $1020, and silver exceeded $20, yet here we are now, with gold now above $1145, and silver at $18.33, not even at $19!
The really funny thing is the way the popular media spin the price relations.
When silver underperforms gold, they say, "Silver is not confirming gold's rise, therefore, gold prices are due for a fall."
And when silver outperforms gold, they say, "Silver is exceeding gold's rise, therefore, this bull run is overdone, and thus, gold prices are due for a fall."
In other words, we have a manipulated market. Not only is the price manipulated, but so is the news coverage!
Of course, the media could give opinions the other way, and say, "With silver lagging gold, it shows that gold has much further to run, and also silver is due to catch up and exceed gold's pace, thus making silver the much better buy now." Or, after silver outperforms, they could say, "Silver's outperformance has confirmed everything the silver bulls have been saying for the last ten years." But they never do that, do they?!
As it is, the price ratio changed from 64 on Friday to 62 on Monday, so silver far outperformed gold on Nov. 16th.
Gold moved from $1118.50 on Friday to $1139.80, a rise of $21.3/oz., or a 1.9% increase.
Silver moved from $17.42 on Friday to $18.40, a rise of $.98/oz., or 5.6% increase.
Silver sure didn't lag behind gold on that day!
So, is all news that is bearish on silver evidence of "manipulation?" Of course not. Some commentators are not colluding on purpose, they are simply willfully ignorant.
The silver to gold ratio is the red line. You can see it topped out at 100 in 1990, when it took 100 oz. of silver to buy 1 oz. of gold. This ratio dropped to nearly 50 in 1997. It went back up to 80 both in 2003, and 2009, and now has gone back down to about 64, and now 62 today.
So, depending on the time frame, silver has out paced gold, or gold has out paced silver. As the red line goes down, silver is better. As the red line goes up, gold is better.
The Vertical Striped Striped flag- The flag of liberty and Sovereignty
But if you use a selective time frame, only 10 years, you can see that the silver to gold ratio was about 60 ten years ago, and is 62 today, showing that gold slightly outperformed during that selective time period in question. But what is the main thrust of Gary's argument? That the future must be like the past? And that the past only consists of the last ten years? Clearly, neither premise is not even remotely true, and the entire argument would deny the reality of economic cycles. Clearly, Gary is not ignorant of the economic cycle, so why did he forget that his argument would not be valid? Did emotionalism get the best of Gary?
As we can see from the big picture, Gold would have been a better investment than silver until 1990, the key turning point. Gary's claim to the foundation of his "correctness" is being good at making interim market calls, and that he is old. Did he tell his subscribers to load up on silver in 1990? I have no idea. Did Gary tell his subscribers to load up on silver when it hit $8.50/oz. in the last year? No. I know. I've been a paying subscriber of his since he tried to discredit me. In his own words, "His "market calls" were utterly useless when it mattered."
Furthermore, the dollar/gold price charts, and dollar/silver price charts do not "tell all" as he claims. Such charts contain zero information about how many dollars have been printed up in the past, and have yet to show up in futures prices of the metals. Such charts contain zero information about how much silver has been consumed and lost in the age of electronics that have ended up in landfills at concentrations too low to economically recover. It is only bad theory that the price charts contain "all the information" you need to know to make a future prediction on prices.
The charts Gary chose to present are not even "objective facts". All gold/dollar and silver/dollar price charts are misleading, as the dollar is not a constant measuring tool, but a varying one. What if I showed you a growth chart of my 15 month old boy, but used a ruler made out of silly putty and stretched it at different rates at varying intervals? Certainly, nobody would call such a chart an "objective fact". Charts are also not "objective facts" when you can produce them over select time frames to distort the overall picture. Gary's price charts from the year 2000 are not as useful as the long term ratio chart above, if you want to try to use a chart to make long term predictions.
Parallel State Gold currency bill
Is anyone here planning on living for longer than a time frame of the next ten years? (Well, Gary might not, he's old, remember.) If you plan to live longer, you might want to consider longer time frames. I know I want to. After all, I'm only 39, and if I live to be 90, I can use an investment that might not pay off in 10 years, or even 20, but should come to fruition within my time frame of up to the next 50 years. For me, silver is it.
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