Gold price Price Today Hits All Time High: How To Know When To Sell Silver And Gold
So when you see both of these together, uh it’s, probably a good idea to either lighten up or get rid of both of them. Uh because, like they say, trees don’t grow to the sky, so there will be a top eventually and uh be prepared for it. When it comes because when these things turn they turn down very quickly, so here you see, the gold futures uh august is trading at 1928 september is trading at 1931. It went as high as 1940 and silver futures are up a lot, a dollar 25 or five and a half percent, so uh. The good thing about the gold all time high is that it went right through the resistance you know of the old time high with any real pullback, so uh that’s that’s, pretty bullish uh. It says that there’s probably a lot more room to run, but we will see so the one subjective way to know when the price of silver and gold are getting a little too crazy is. When you see the uh articles in yahoo, every article is like: should you buy gold and silver? Should you put it in your 401k? Is it going to outperform the s p? 500? All these articles that’s, usually the sign of a top it’s, the proverbial uh, when the shoeshine boy starts telling you about silver it’s time to get out.
But what is an objective measure to figure that out and probably the best one is the gold to silver ratio.
So back here in 1979, when gold went to 800 and silver went to 50, the ratio was like around 20 at its peak, meaning it takes 20 ounces of silver to buy one ounce of gold. Here in 2011, uh again silver went to 50. Gold went to like 1900 or so uh, but not at the same time, and so the maximum low ratio was like 31, so it took 31 ounces of silver to buy one ounce of gold. Here recently we hit about 115, so it takes 115 ounces to buy one ounce of gold, so that’s saying that either gold is really expensive or silver is really cheap and if you’re a holder of both gold and silver uh, you should take advantage of these ratios And trade, when they’re favorable into the thing that is cheap, sell the thing that is expensive and uh. You know continuously do that, so the gold and silver ratio is not going to go to 16 to 1, like it was historically and and how it is in the ground and all that, but you see it’s around 50 or so so. If we get down to that level right now, we’re like in the 80s or something like that, if we get down to that level, 50 and there’s a spike down to an even lower silver ratio like in the 40s or something like that and it’s a it’s.
A quick move: it’s, a big move, that’s, probably the indication that the silver move has peaked and run its course, and that might be a very good time to swap out your silver for gold.
Okay, because if you’re buying silver up here, you know at 90 or 100 ratio and you’re swapping it out back here in the 40s or something along those lines for gold that that’s a pretty good trade. But if you just want to cash out that usually means that, when silver gets too low in the ratio, that also means that gold had a good run up too. So both of them are usually topped out by that time, when silver catches up to gold and really lowers the silver gold ratio. To give you a little clearer representation of that let’s. Look at the silver etf slv in the blue and the gold etf gld. In the green – and this is going back 10 years and it’s starting from the zero percentage position, meaning this graph shows their percentage gain. Okay, so starting here they both start at zero and how far do they increase in percentage? And you see that in 2011, silver really outpaced gold and was up like 170 percent or so and then started coming in uh way before gold peaked silver peaked in in april, gold peaked around august um, but gold was only up what like 50 or so and After the big silver move, then it just trended down and even went lower and worse percentage wise than gold for a number of years.
Until just recently, when it fell over here to like the 115 gold to silver ratio, and but gold has just been kind of trending higher slowly but steadily and now, silver is looking to catch up and uh.
Look for a move like this one here over here to give you your indication that things have gotten out of whack and that it’s time to either lighten up or just completely get out, and so how? Why does this happen? It happens because, as gold goes up, people start to recognize it. They start to uh. You know they see something going up and they want to get on board whether it’s, bitcoin or netflix or whatever, and so if gold is two thousand dollars a lot of people. Can’T afford it or think they can’t afford it, so they buy silver as a proxy to gold and it’s. Usually like gold is like the s. P, 500 and silver is like the nasdaq. It moves a lot higher on the upside, but it also moves a lot lower on the downside and so people start piling into slv like if you look, a lot of robinhood traders now are getting into slv. So this kind of proves uh my point and so people chase something that’s going up usually to an extreme and it gets overbought and then it comes back down. So that should be a good indication of where you should be getting out when you start seeing a chart like this over here now, when gold and silver start to make new highs and get people’s attention, you got all these uh gold, sellers and cheerleaders coming out Of the woodwork start saying things like gold is going to be ten thousand dollars.
An ounce and silver’s gon na be a thousand dollars an ounce and all this stuff – and you know, take that with a grain of salt, because trees don’t grow to the sky. However, there is one thing that’s different this time and when, when you hear somebody say it’s different this time, it never really is but here’s a little difference in terms of uh a boost for gold in this period. Now, because the last time in 2011, when gold made its high in august, the 10 year note was about 2.6 right now, it’s like 0.6. So why does that matter? It matters because people look at gold and say: hey gold. Doesn’T pay me any interest. So why should i hold it? I don’t get anything for holding it. However, when, when the 10 year note – or you know, general bonds and stuff don’t pay any interest, when you have zero percent interest rates, there’s no opportunity cost that you’re losing for holding gold against holding bonds. So that is definitely a boost for gold. Really low interest rates, with the expectation that they’re gon na stay at zero for some time so people say i could buy bonds and it makes me zero and the dollar is going lower. Why don’t? I just hold gold. That also gives me zero, but at least it keeps my purchasing power, so that is definitely a plus for gold. So, like i said, uh trees, don’t grow to the sky and neither will gold and silver uh.
But the thing is that when these things do start making big deals in a day percentage, wise and people are really uh excited about it, they’re not going to be coming out and saying: okay, this is you know, that’s enough, it’s gotten out of hand it’s, not Going to go much higher, no the higher it goes, the higher the forecasts are going to be. So if silver goes to 40 there’s going to be people saying it’s going to 200 or 500 dollars. If you do a search silver going to 200, you already see people saying, will silver hit a hundred dollars an hour silver thousand dollars, an ounce right, there’s, already articles 130, an ounce silver may not reach 200 soon, but higher prices are coming. Silver should be priced at 200 right, so this is all today right july, 2nd june 17th uh. But if you go back to the high in silver in 2011, people were saying the same kind of thing. Okay, this article is from april 29 2011 saying that well, not only will the silver ratio return to the 116 historic level, but it can move to 1 to 10 or even 1 to 5 and at the prices of gold these will be the prices of silver. So, at the 1 to 10 ratio of gold is 3, 000 silver will be 300 and all this kind of stuff uh. You know how it played out that didn’t happen and silver went as low as what like, 10 or so recently.
So just know that when there’s extended exuberance, that’s, usually the time to get out, and so when you see that go check the gold silver ratio uh see how much more percentage wise silver has moved against gold and that’s, usually an indication that it’s topping out and It’S time to start either scaling out or just getting out completely so that’s. My video on the new gold high and uh, how not to get burnt. If you’re gon na try to play the gold or silver and uh where you should be getting out.