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Own Gold? Now Is The Time To Swap It Out For Silver – Here’s Why

Silver is shining a big and bright buy signal.

Heck, most of the commodity market is as well. But I am partial to the shiny stuff. I mean, have you ever held a gold or silver ounce in your hand? It just feels like wealth.

What I really like is that I can go down to my local coin store, lay some fiat money on the counter, and walk away with some coinage.

Plus, I like to know I have a pirate treasure. Arrgh!

All kidding aside, if history has anything to show us (and it always does), if you purchase silver now there is almost an absolute certainty that you will increase your wealth from it in the future.

Now, I can’t say exactly when – but that day will come.

Here’s why.

This chart shows the gold to silver ratio going all the way back to 1998. The higher the graph, the higher the silver to gold ratio was (meaning cheap silver).

Silver is naturally found in the Earth at a 9-to-1 silver to gold ratio. It hasn’t traded there ever, or at least in a very long time so that it doesn’t matter. What matters is that there is a historical precedent that if you buy silver when it is above a ratio of 75 silver ounces to one ounce of gold, that you will make money.

Right now that ratio is at 78.

As you can see, it never stays above the 75 ratio for long.

So buy now – but when to sell?

Again, the answer is in the chart. Somewhere below 50.

So all you need to do is buy silver now, and then wait for the ratio to drop down below 50 and you sell for a nice profit. You can also not sell, but trade it in for gold. Then when the ratio gets above 75 again, trade it back for silver.

You can buy coins, and I suggest everyone has at least some precious metals as investments, but you can also buy silver mining companies.

The benefit of owning shares of silver miners is that they benefit exponentially from the increase in the price of silver.

You see, they have fixed costs. They have fuel and machinery to buy. Employees to pay. They have all this overhead that doesn’t go down if silver is cheaper. Most miners are having profitability problems right now.

But when the price of silver goes up, well that just increases their profits (and their share prices) immensely.

Now, if you can find some silver miners that are still profitable, or nearly profitable, at the current low prices – well they are going to be minting wealth.

Have Gold? Now is a good time to swap it for silver.

That is what I did this past weekend. I put my money where my mouth is. I took 6 of my gold ounce Krugerrands and traded them into a bit over 435 ounces of silver.

I received:

  • 100oz Johnson Matthey Bar
  • 100oz Royal Canadian Mint Bar
  • 2011 Australian Kookaburra kilo
  • 3x 2013 Australian Koala kilos
  • 2014 Kookaburra kilo
  • 2015 Koala kilo
  • 2015 25th Anniversary Australian Kookaburra kilo
  • 10oz A-Mark Bar

That’s a lot of silver – check it out!

I had to give up some ounces in exchange fees to do this swap. But I do know that I can turn 6 ounces of gold into 8 when the ratio drops below 50-to-1. I think I will come out ahead in the end.

What do you guys think? Would you trade your gold in for silver to do a Silver Swap in hopes that history repeats?

Let me know in a comment below.

(I am not a professional investment advisor. This post is just for informational purposes only.)

7 comments

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  1. OthalaFehu

    Interesting strategy. I am greedy and like to keep both at a 10 to 1 ration, I switch off which ones I am buying, currently buying platinum, do you mess with any other metals? What company do you use?, I use APMEX, they are pretty good.
    OthalaFehu recently posted…The Good Old DaysMy Profile

    1. MrDD

      I use APMEX a lot, but I also search smaller places like Monarch Precious Metals and Gainesville Coins. eBay can have some deals as well.

      I know platinum is cheap, but it has never been very popular with investors so the premiums are higher. Also, I believe that the electric car surge is just starting and so the use of platinum for catalytic converters will cause the price to remain low for the foreseeable future. So just the standard gold and silver for me.

  2. RichestManInLondon (@RichestManInLDN)

    Interesting strategy & very nice collection!

    I literally started buying bullion today by buying a silver Britannia Coin.

    My plan is to buy 1 coin or bar per month to subtly build a collection. Just treat it as a collection hobby now, then see where I am in 5/10 years.

    I’m really liking silver now though, I sense that it is underpriced.

    Are there any miners you have your eye on?
    RichestManInLondon (@RichestManInLDN) recently posted…Wiley – On A LevelMy Profile

    1. MrDD

      Hey, slow and steady will build up a nice collection. Glad to see you caught the silverbug, just holding one of these coins is great! And yes, I do believe that silver is underpriced and due to rise faster than gold.

      I have my eye on a few junior silver miners. I look for ones that are profitable at current prices, so when prices rise it is all profit – basically. I have not bought in yet, but I have my eyes on these ones:

      6: SilverCrest Metals (SVCMF) $1.68/Share – Market Cap $89M

      5: Arizona Mining (WLDVF) $2.86/Share – Market Cap $890M

      4: Endeavour Silver (EXK) $2.39/Share – Market Cap $314M

      3: Great Panther Silver (GPL) $1.34/Share – Market Cap $227M

      2: Avino Silver & Gold (ASM) $1.49/Share – Market Cap $77M

      1: Silvercorp Metals (SVM) $2.73/Share – Market Cap $478M

      1. RichestManInLondon (@RichestManInLDN)

        Whoa… thanks a lot! I will be sure to check them all out and then decide which will return me double-digit gains this year haha
        RichestManInLondon (@RichestManInLDN) recently posted…Wiley – On A LevelMy Profile

  3. Mr Defined Sight

    I’m a fan of silver as well! I have some that I will most likely pass down the line. Love looking at it once in awhile. I believe that everyone should hold some physical.
    Mr Defined Sight recently posted…1/24 Hump Day Heat: Bloggers Sizzling Up The Week!My Profile

    1. MrDD

      Oh, looking at the market it seems that today is the start of the silver price march to the upside.

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