Stackers Are Selling Silver For Gold - (Smart Move Or Big Mistake?)

Summary

In this video, Smarts Silver Stacker discusses the current gold-to-silver ratio, which has recently surged over 100, a rare occurrence in the precious metals market. He addresses concerns from stackers considering selling silver to buy gold and highlights the potential risks and rewards of such a move. Smarts shares insights on the historical behavior of gold and silver markets, advising that focusing on silver might be more beneficial at the moment due to its lower cost. He emphasizes the importance of not reacting emotionally and staying grounded in market trends, while also emphasizing that both metals have their merits in a well-balanced stack.

Takeaways

• 😀 The gold to silver ratio is currently over 100, meaning gold is valued higher than silver at this moment.
• 😀 Historically, the gold to silver ratio has crossed 100 only a few times, including during the 2020 COVID market crash.
• 😀 In 2020, the gold to silver ratio reached around 120, which was a great time to swap gold for silver and significantly grow your stack.
• 😀 The current high gold to silver ratio suggests silver may be undervalued relative to gold, making silver a more attractive option for stacking right now.
• 😀 The gold to silver ratio typically fluctuates based on investor sentiment, with gold being favored initially in a bull market, followed by silver's rise.
• 😀 There’s a potential for significant upside in silver, as seen in past bull markets when silver has historically caught up to gold.
• 😀 Risking a 300% increase in silver value may be more rewarding than swapping silver for gold now for a 20% gain in a high gold to silver ratio environment.
• 😀 The silver market is less liquid and more speculative than the gold market, making silver more volatile but with greater upside potential in the long term.
• 😀 As gold has been attracting institutional attention, silver is likely to see more speculative interest as the bull market progresses.
• 😀 The market's low premiums on both gold and silver bullion indicate the early phase of the precious metals bull market, where value is more focused on the price rather than speculation.

Q & A

What is the gold-to-silver ratio mentioned in the video?

The gold-to-silver ratio is currently over 100, meaning you would need more than 100 ounces of silver to buy one ounce of gold.

Why is the speaker discussing the gold-to-silver ratio?

The speaker is discussing the gold-to-silver ratio because many investors are considering swapping their silver for gold, and he wants to provide insights on whether this is a wise decision based on the current market conditions.

What historical events does the speaker refer to when discussing the gold-to-silver ratio?

The speaker refers to the gold-to-silver ratio being above 100 during the COVID sell-off in 2020 and the early 1990s. These instances are considered unusual but provide important historical context.

What does the speaker suggest about buying silver when the ratio is high?

The speaker suggests that buying silver when the gold-to-silver ratio is high is not ideal. He encourages stacking silver when it's undervalued, as it has historically performed well when the ratio decreases.

How does the speaker view the current market for gold and silver?

The speaker views the current market as being in the early phases of a precious metals bull market, with gold seeing significant institutional interest, while silver is considered undervalued relative to gold.

What does the speaker mean by 'risk vs. reward' in the context of swapping silver for gold?

The speaker argues that swapping silver for gold now may yield a 20% increase in gold holdings, but if the gold-to-silver ratio eventually drops (as it has in previous bull markets), silver holders could see a much larger increase in value, potentially around 300%.

Why does the speaker not play the gold-to-silver ratio in his own stacking strategy?

The speaker does not play the gold-to-silver ratio because he prefers to stack both gold and silver without attempting to time market fluctuations. He focuses on the long-term value of both metals.

What is the speaker's focus when stacking silver?

The speaker is currently focused on stacking constitutional silver coins (90% junk silver) due to their relatively low premiums compared to other silver products.

What does the speaker say about investor sentiment and behavior in the precious metals market?

The speaker explains that early in a precious metals bull market, gold tends to attract attention due to its liquidity and status as a safe haven. However, as the market progresses, investor sentiment shifts towards silver, which is more speculative and volatile.

What is the speaker's view on the potential for a speculative silver market?

The speaker believes that as the precious metals bull market matures, silver will begin to gain more speculative interest. This could lead to significant price movements as silver 'plays catch-up' to gold, similar to what happened in 1980 and 2011.