I just had a thought, gold is expected to do well unless the Eurozone crashes and sends us back into recession.

I am in Silver at the moment, and have lost money already. but still positive about the outlook for silver this year. I am wondering if I should swap my silver for physical gold, as during the 2008 recession and into 2009 the Gold/Silver ratio went to 90 – now it is relaxed at 50 +-

I dont want to sell my silver off and leave the PM market yet, as I am sure thigns will happen in the enxt month. I am just pondering if I should swap my phys silver for gold, once the poo hits the fan the volatile silver should take a bigger beating than gold – and once the markjet realises that the only sure currency is metals – then buy back into silver?

I would like to know the readers opinion on this strategy for the first quarter of 2012?

@ Aaron:
If you got partial answers to your questions from 20 different readers on this site, they would likely be split 50-50. Nobody, not even well respected folks like Eric Sprott, or Marc Faber, or Richard Russell, or Ben Davies can give you a response that includes the “time factor” you seem to be looking for.

What the PM Experts Will Tell You:
But they will all say this, as will the editor of this web site:
“in the longer term, holding both physical gold and physical silver one of the very best strategies we could have.” In my case, I believe that the physical PM that I have is not-to-be-traded at this point in time for anything; why trade it if it is currently below your purchase price? What’s to be gained?

Big Corrupt Banks Deluded Investors in 2011:
So I wouldn’t trade it for anything, even though the corrupt banks have done their very best in 2011 to discourage investors from holding physical PMs by shorting the futures markets (. . . while they’ve been stealthily closing their massive short positions in PMs at ridiculously low prices!). Consider this: in November and December 2011, these corrupt banks (most notably JPM and HSBC, which collectively hold approx. 75% of the total shorts) have sharply reduced their net short positions in COMEX gold and silver; today, their net short positions are at their lowest levels in years.

Then What are We Willing to Trade?
If we already have mining stocks, then we should carefully consider when we are willing to trade them. If we consider the fact that PM mining equities presently have price-to-cash-flow multiples that are at or near generational lows, this represents a great buying opportunity, if one has the available cash. In my case, I am willing to trade my paper gold/silver and mining stocks at some point later on in 2012 or 2013. As the Ed. of this web site has stated several times, if we believe PMs will do well, then we need to have the strength of conviction to hold on, and not buckle whenever these corrupt banks “do-their-thing.”

You should have been buying at the $26-35 levels for the past several months. DO NOT sell out now. Keep buying until it gets somewhere north of $35. A gold/silver ratio of 50-55 is a holding pattern, which way it goes determines whether to swap silver for gold. You swap silver for gold as the ratio nears 30-40. As the ratio goes up past 60-65, you swap gold for silver.

Because I have a goal to be outside of my current area by late 2012 and want to pay off as much stuff as I can, I will be holding silver ’til about $75-80, and I will sell a very small portion to pay bills off, and then wait for it to drop back down to $45-50 around May 2013, the next possible peak before 5 margin calls hit again before buying the hell out of it again. Something like that.

Again, I believe that the next interim peak will happen around May 2013 before knocking $25-30. Look at the data of the last 11 years, and you’ll see a pattern of peak to peak averaging just a little over two years.

Aaron..good to meet you!!..i have grown tired of writing, but here goes..i bought silver bullion 3 times last year..i am deep underwater as an investment or wealth preserver..i could not care less..the ONLY threat to precious metals long-term is government malfeasance..i feel only relief to be out of equities entirely..anyone who insists the bullion markets are not rigged to the fullest extent possible is a broker, advisor, or fool..stay in silver until you make money..how much is up to you..tim

i agree w/your scenario aaron.

also with Peter on by the end of the year silver should be the bigger % gainer.

Can’t advise you or tell you what to do Aaron – you have to make your your own mind up.

For what it is worth, I still think the stock markets will tank in the Jan/Feb and that they will take both gold and silver down with them. I think that will present a buying opportunity for silver.

I follow Clive Maund and he has some very interesting things on his site about silver and gold. I also follow theshortsideoflong blog as well which I find useful.

I am not a financial adviser or expert – just a guy trying to get by.

Why not add godfather than take away silver. I have been adding gold for the last few months especially the last couple of weeks. But I am holding some fiat back in anticipation of a Market pull backlight Spring. I buy in the uk and silver has too much of a premium (20%vat) to justify thechance of greater gains in the event of risk-on. Gold looks cheap and central bankers will accumulate much more from here on.

Hi Aaron – In my case I’m a gold bug, which means i probably bet on gold emotionally, because I like it so much. I first started buying gold when i had a small retail gold trading and wholesale manufacturing operation back in the early ’80’s. Today, i buy gold to hold it, not to trade. I was buying silver to trade, but now i’m treating silver like gold – a hold. I went ‘all in’ in gold in 2009, and then eventually added silver to the portfolio until i was at a 50/50 match in mid-2011. I buy physical mostly. I believe that sister-silver will not move without gold moving, and once gold starts to move, silver will catch-up again. PM’s are a long term play in my book. If you treat gold as speculative, then silver is 2X speculative, twice as much so. I feel gold bottomed at $1520 last month, and its upward to $2500 from here, the next bench. The bottom line question is, will the central bankers print? If you think so, then you know what to do.

Aaron: I can only shoot from the hip on your question, but since things seems to be picking up speed in the economic crisis, I would hesitate in selling off my silver for the simple fact that you may not be able to get it back if the demand builds up quickly. Patience is far better a strategy in my viewpoint. Even if both gold and silver take a hit.

Regarding the responses to Aaron:
Very good remarks from all!

@ Steph: while no one can accurately predict the timeline for silver’s cycle, your “estimated data points” for silver’s price action over the next few years are reasonable. In my case, I’ll continue to hold my physical gold. Like you, I will continue to hold the physical silver as well, but will begin to sell off some (about 10%) after the price exceeds $55 -$60; when it exceeds $70, I’ll sell off another 20% and wait for the next cycle. And as for the 5 margin calls, we can count on the CME to “rinse & repeat” when JPM pushes the panic button.

Subject: “Bragging Rights”

MineWeb.com is an excellent source about PM and base metals mining news.

I just got an email from Mineweb.com, advising me that in their annual “gold price prediction” contest, I was tied for first place in predicting the high spot price for gold in 2011. Kinda nice! (my pen-name on the mineweb site is “obewon86″). Fifth paragraph from the top.
Source:
http://www.mineweb.com/mineweb/view/mineweb/en/page34?oid=142407&sn=Detail&pid=102055

As for 2012, I don’t have a clue regarding gold’s high spot price, but I’m sure that there will be much more volatility, with perhaps two occurrences of 3 sigma price deviations.

Those interested in joining this contest can go here:
SEND ENTRIES TO editor@mineweb.com

Hi Everyone

Thanks for the advice and your views!

Reading some of the headlines today I think that the world has come drown from the celebrations of new year and good hope, it looks to be a bumpy year for the stock market from the word go!!

Thanks and good luck to everyone, every problem or tragedy presents an opportunity

@ Obewon

->”advising me that in their annual “gold price prediction” contest, I was tied for first place in predicting the high spot price for gold in 2011. ”

Bravo, good show. It fits well with your handle ‘Obe won’

How about this: Peter runs a contest:

Rules:

The deadline for entry is Feb 29th.

To enter, applicants must send Peter by registered mail, one oz silver, cut-off postmarked prior or on 29th.

The entry contains a sealed envelope marking the Au spot price prediction in USD, which can also be broadcast here after Mar 1st, by the entrant, if entrant so chooses. ( or they can keep it a secret at their option.) Period ends Dec 31st 2012.

To the winner go the spoils, but in Gold bullion. Peter can do the Ag exchange to the nearest 5 or 10gm Au wafer, or whatever Au gm product is convenient for him.

The three top picks get a free newsletter for the following year.

Peter can publish a list of the various picks anonymously April 15th, no names attached.

The advertising potential for the website is good, maybe even great.

Iran War sub-clause, if Iran is attacked, the contest period end-date accelerates and the finalists are picked within 7 days post-attack. (on the 7th day)

Ed Note: You should make your money buy buying bullion not competitions! We’ve made the point often enough that short-term price movements are not worth trying to get right, so this seems misguided.

.

@Ed

Just having some fun, Ed. I don’t actually make my money buying bullion, i make my money in business, and then sink it into bullion for the long haul. Its called wealth preservation. Keeps me from blowing it on foolish things, which i am too often wont to do, usually with Flynnesque panache and outcome.

@ James M.:

Tnks for the kind words, my Canadian e-friend. I trust that things are going well for you. Actually, I liked your suggestion regarding the contest, but Peter has already spoken.

P.S. Earlier today, I submitted a more detailed response to your suggestion, but somehow it didn’t make it into the “final production.”

I think we should run the contest. I can always advertize Peter’s newsletter as a prize. I have the payment gateways for that, in house,and the technology. But, we would need a fiduciary trust party. Respondents can just but an oz from the bank. I could capitalize the bank with a few 1,000 oz bars. Bloody heavy stuff.

Over..

@James M.:
I agree that the contest would be fun, and would also spark interest not only among the regular viewers on this site, but also the newcomers. The most painless way to initiate this contest would be to conduct it like they do on Mineweb.com. No prizes, no money, but just for bragging rights.

Ed Note: Commentators should post their gold price predictions in the comments section and then later refer back if they happen to be right – and of course forget all about it if wrong! Sorry but you completely misunderstand ArabianMoney if you think we are trying to get the trading price of gold spot on… Nobody can do it. Look at what a mess Dennis Gartman made predicting the end of the gold bull market last month… He could not even get the direction right!

@ Ed.:

As you know, I’ve been a reader on your site for a number of years, and have been very active in responding to your commentaries. Over the past few years, I’ve mentioned on many occasions on this site, that nobody can predict the gold spot price accurately, because the spot prices are heavily manipulated (we make these predictions just for fun!).

Having said that, I’m sure that the folks at the JPM Commodities Trading Desk, more specifically Blythe Masters, can tell you where she plans to force the gold spot price to move (and by how much) on any given week throughout the year. Absent ferocious buying in Asia, she can paint the tape in any way she wishes!

@ Stephanie..You said “.Because I have a goal to be outside of my current area by late 2012 and want to pay off as much stuff as I can, I will be holding silver ’til about $75-80, and I will sell a very small portion to pay bills off, and then wait for it to drop back down to $45-50 around May 2013, the next possible peak before 5 margin calls hit again before buying the hell out of it again. Something like that.”

Why would you sell a very small portion then wait for it to drop down? Sell it all and then buy it back. Either you believe or you don’t.

Being out of the market is the last thing you want when it takes off. I could not buy back my entire position in a short enough time frame if I did that.