I don't the the ratio of the gold price to the silver price tracks anymore.
There was a long article about this - maybe on Kitco - that explained that this ratio was important when both metals were money. Also, that the ratio varied widely over time - before discovery of the new world, silver was maybe 1/8 the gold price.
The other differnce today is that gold is not consummed, and can be recovered at sub-micro sizes from disseminated Carlin type deposits, while silver is still consumed in photographic prints, solders, electrical contacts, etc.
I expect silver is way undervalued, which is what the 50:1 gold silver ratio would indicate. I expect silver could move way over $40 (roughly 16:1) once the degree of shortage starts to bite, like it has in copper. I would not be surprised to see gold sink under $600, as investors don't want to pay that high a price if they will need to wait another 2 years for inflation to really get moving...
Platinum and Palladium have similar end uses, auto catalytic converters, and can subsitue for each other after a lag time to qualify new cat converter designs with the auto makeers and regulators. This price relationship should be pretty stong. Palladium is likely significantly under priced.
But a number of informed people (well, gold bugs, actually) who think both metals are going higher don't but much value in the ratio of prices. |
