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Tom wrote another masterpiece.
Over the past 8 months, silver has seen a spectacular run-up in price,
taking it from $17/oz in August 2010 to an intraday high of almost $50/oz
on Monday, April 25 2011. Correspondingly, the gold:silver price ratio has
dropped over that period from a value of approximately 68:1 down to 31.44:1
at the time of writing. This is a drop of 53.82%, the biggest spike down in
the gold:silver ratio since the Hunt spike in 1979. Back then, the ratio
went from a value of approximately 33:1 down to 13.99 — a drop of
56.61% in approximately 5 months time. Furthermore, silver is now in its
25% most expensive trading days since 1885 when compared to gold, with an
average of the gold:silver ratio of 45.7:1 over the past 125 years.
..
There are precious metals investors who try to maximize their number of
gold and silver ounces by using fluctuations of the gold:silver ratio to
their advantage. These people are facing a difficult decision right now:
Given that the gold:silver ratio has spiked down so far, and given that
silver’s relative expensiveness with respect to gold has gone up so
far, how much of their silver holdings should they swap for gold?
Some very insightful graphs and conclusions.
gold.approximity.com/The_Hunt_for_the_Gold-Silver_Low.html
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