Quote:
Originally Posted by jammies
Clearly silver isn't ALWAYS 1/16 the price of gold - that's it's AVERAGE value over a period of time. Gold could stay 40 or 50 times as valuable for years and that ratio would just get adjusted downwards and you could still make the same "argument" that eventually it's price would deviate towards the norm, but you would still be just guessing.
I suspect the linkage between the two relies on relative scarcity. Maybe much more silver is being produced nowadays. Maybe it's becoming cheaper and cheaper to mine and refine. Maybe gold mines are going dry while silver mines aren't. I don't know, but I sure wouldn't be investing in silver without finding out and just relying on a "historical" ratio that means just about nothing without context.
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Exactly, if you played that trade with the Oil/Gas ratio over the past couple of years, you'd be worth a whole lot less in terms of dollars, but I suppose you would have a bunch of gas!