A question for "goldbugs":

What is the investment potential for silver, assuming the price of gold rises as per the Andy scenario? Is there a historic relationship between the price of gold and the price of silver that will likely be maintained through this period? Is the market going to be manipulated by the likes of Buffet and Gates?

Thanks,

Liberty

-- Liberty (liberty@theready.now), September 29, 1999

Answers

The historic ratio of silver to gold in ages past was 16 to 1 although in the past I believe to ratio got as high as 30 to 1. In the last 25 years the ratio has been as high as 70 to one or more.

Should gold and silver once again become money in the true sense, day to day transactions, then one could expect to ratio to fall back closer to 16 to 1. Also silver has many more industrial uses than does gold.

-- Ed (ed@lizzardranch.com), September 29, 1999.

And how 'bout Platinum. Isn't there more y2k production disruption there or since its tied to the economy more will it fare worse due to a y2k/stock bubble burst slowdown???

-- Downstreamer (downstream@bigfoot.com), September 29, 1999.

During recent precious metal runups, silver has done better percentage -wise.

Historically the silver/gold ratio has been about 14/1; that is fourteen ounces of silver equal one ounce of gold. Today it is about 56 to 1. Now, there have been developments in the last century that may have impacted that historic ratio permanently. One was the discovery of the Comstock Lode, which added a great deal of silver to world inventories. The other more recent development is the digitalization of photographs. The biggest consumer of silver is China and the majority of that consumption is in the development of photographic film. If technology (digitalization) makes the old methods obsolete, then silver may not be consumed as fast as production. Very little gold is consumed in industrial processes, and most of that is in the space industry.

My guess if y2k>8 than silver will be the best place to be. Simply because the common man won't be able to afford gold. In India, the common people are allowed to own precious metals only in the amount which they can carry on their person. They can't afford gold, so they buy lots of silver and in the end carry it as jewelry. If y2K is only a depression, and the gov'ts inflate to "do something" about the suffering going on around them, then gold will probably perform the best, even though both silver and gold will increase in fiat value.

The other trade-off is how handy you want your personal stash. If you are set on a homestead, or where you think you will be in the future, the fact that silver is bulky and heavy probably won't bother you. It would be used to barter small denominations for small day-to day things you can't produce yourself. If, on the other hand, you think that you may have to "bug out" because of where you live, then gold coins are the way to go. Or, if you look to buy large-ticket items in the crash, then gold would probably be the way to go. You see, it depends on your own individual place in the world.

I'd recommend at least 30 percent of your holdings in silver. If you think the historic ratio will return in the future, 50 percent silver would be a good bet.

Just my opinion.

-- Jim the Window Washer (Rational@man.com), September 29, 1999.

What kind of silver? I really hesitate to buy junk coins at the markup we are seeing now. What is the best bet to purchase (like from a net site) that would be a spendable commodity? Any suggestions appreciated.

-- LauraA (Laadedah@aol.com), September 30, 1999.

Hey, Liberty.

If gold busts loose, silver will follow, perhaps even lead. The framers were (of course) correct when they specified that gold AND silver would be the money of our Country. Gold is your main armament, and silver is your sidearm.

Today, you can easily hold $10,000 worth of gold in one hand (about 30 oz, or two pounds), while the dollar equivalent of silver can barely be lifted by a strong man (2.000 oz, or 125 pounds). Silver is good for the small stuff, and for pocket change, but a real pain in the butt for major transactions.

Certainly, the Big Fish can perturb the market, but, as we are now seeing in the gold market, they cannot control the market. Especially if their communications are malfunctioning.

Godspeed Liberty,

-- Pinkrock (aphotonboy@aol.com), September 30, 1999.

Liberty, good question.

"In early 1998, the world's second richest man realized that the best place to go with part of his money was the precious metals market. Warren Buffett's, Berkshire Hathaway then placed a huge bet on silver, nearly 130 million ounces, about 20% of the available silver supply"....he took substantial delivery of his silver, offshore.

Shares in Berkshire Hathaway were going for around $67,000 each back several months ago. I'd say he's sniffin' around something that has great potential. I also hear he is taking delivery of gold, but on a smaller and more discreet scale.

I think a small addition to your portfolio is a good hedge. IMHO, only of course.

-- OR (orwelliator@biosys.net), September 30, 1999.

It is interesting to not that when Warren Buffett purchased 20% of the available silver, he only used 1% of his assets...

What is wrong with THIS picture???

chewin' on a sock...

The Dog

-- Dog (Desert Dog@-sand.com), September 30, 1999.

Thanks, metalfolk. I'm off to stock up on silver eagles...

Liberty

-- Liberty (liberty@theready.now), September 30, 1999.