Craig Smith Ratio Trading Alert

From the desk of Chairman Craig R. Smith

A Simple, Time-Tested Way to Increase Precious Metals
Holdings …Without Spending A Penny Out-of-Pocket!

November 2, 2020 - Rising gold prices have dominated the precious metals news so far this year. I am issuing this special alert because I believe there exists today an excellent precious metals trading opportunity, which is often overlooked, based on the established relationship between gold and silver prices for thousands of years. Studies of the “Gold-to-Silver Ratio” indicate that once the ratio peaks, a sizable movement in both gold and silver prices usually takes place.

Introduction

Rising geopolitical concerns along with the Fed’s decision to accommodate the financial markets by lowering interest rates and weakening the U.S. Dollar have sent investors, big and small, seeking the safety of physical precious metals. Gold prices have already reflected these rising financial risks. I firmly believe gold's impressive 30% rally over the past year is finally spreading to other precious metals, especially silver.

Today the technical precious metals trading charts indicate that silver prices may be preparing to 'catch up' with gold prices. The historic “Gold-to-Silver Ratio” - which represents the number of ounces of silver it takes to buy one ounce of gold – indicates that silver prices could be ready to double, triple, or more in the near-term.

In the Fall of 2018, silver prices dipped to $14.00/oz., which approached the raw silver production cost. Because of this, we released a new Swiss America Silver Report to alert our clients of the significant silver supply deficit, increased industrial demand, and the rising Gold-to-Silver ratio.

Silver prices have recently risen above $24/oz. and the historic Gold-to-Silver Ratio (which peaked at 96-to-1 in March 2020) has begun to move toward a more normal valuation. If this trend continues, the ratio may reach 60-to-1, 40-to-1 or maybe even 20-to-1, this could present an excellent opportunity to trade physical gold or IRA gold holdings for physical silver in order to maximize growth potential.

Here is an example of how the changing Gold-to-Silver ratio might affect silver prices. Using an average gold price of $1,900.00/oz., if the Gold-to-Silver Ratio fell from 80-to-1 back to 40-to-1, silver prices would double – from $23.50/oz. to $47.50/oz.

RatioGoldSilver
80$1,900.00$23.75
70$1,900.00$27.15
60$1,900.00$31.65
50$1,900.00$38.00
40$1,900.00$47.50
30$1,900.00$63.35
20$1,900.00$95.00
15$1,900.00$126.65

Of course past performance is no guarantee of future performance, but here are a couple of examples from recent years. In 2011, silver prices touched $50/oz., representing a Gold-to-Silver ratio of 30-to-1. And during the last major bull market in precious metals back in 1976-1980, silver prices also topped $50/oz., and the Gold-to-Silver ratio was 15-to-1.

During the Middle Ages, silver and gold were interchangeable at an average ratio of 15-to-1 or less. The official ratio established in the U.S. Coinage Act of 1792 was 15-to-1, which reflected the natural occurrence of silver-to-gold as it was mined from the earth. A simple return to these historic norms could provide significant profit, as well as protection.

Ratio Trading Strategy Grows Precious Metals Twenty-Fold

The introduction of fiat currencies in the 20th Century, along with the U.S. Government’s decision to stop backing our U.S. Dollar with silver and gold in the 1960s and 70s, caused the Gold-to-Silver Ratio to start fluctuating wildly. Since then, the Gold-to-Silver Ratio has averaged a low of 40-45 and has spiked to an all-time high above 100 in 1991.

This chart illustrates a hypothetical example of how to use the Gold-To-Silver Ratio long-term trading strategy to have grown your wealth over the last 35 years.

Gold silver Ratio
As the chart illustrates, the time-tested Swiss America Gold-to-Silver ratio trading strategy converts gold holdings to silver when the Gold-to-Silver ratio hits 80-to-1 or above. Then it sells your silver holdings, converting them back to gold, when the ratio hits 45-to-1. Doing this could have yielded a twenty-fold increase over the last 35 years!

Here are the simple steps that could maximize long-term precious metals holdings;

1. If we begin in July 1984 with a modest purchase of 100 ounces of gold at a price of $375/oz., when the Gold-to-Silver ratio hit 45-to-to1, it would require a total initial investment of $37,500.

2. When the Gold-to-Silver ratio rose to 80-to-1 in August 1991, we would sell the gold and move the proceeds into 8,000 ounces of silver.

3. When the Gold-to-Silver ratio fell back to 45-to-1 in February 1998, we would sell the silver and move the proceeds back into 177.8 ounces of gold.

4. When the Gold-to-Silver ratio rose back to 80-to-1 in February 2003, we would sell the gold and move the proceeds back into 14,222 ounces of silver.

5. When the Gold-to-Silver ratio fell back to 45-to-1 in May 2006, we would sell the silver and move the proceeds back into 316 ounces of gold.

6. When the Gold-to-Silver ratio rose back to 80-to-1 in December 2008, we would sell the gold and move the proceeds back into 25,284 ounces of silver.

7. When the Gold-to-Silver ratio fell back to 45-to-1 in March 2011, we would sell the silver and move the proceeds back into 561 ounces of gold.

8. When the Gold-to-Silver ratio rose back to 80-to-1 in April 2016, we would sell the gold and move the proceeds back into 44,949 ounces of silver – which today, with silver valued at $17.35/oz. – equals a total value of $779,800 – less commissions and spreads on the trades, which vary by product.

Conclusion

In theory, an initial $37,500 investment in gold would have risen to a total of more than $779,800 by using this simple Gold-to-Silver trading strategy over the last 35 years.

We believe it is possible that the Gold-to-Silver Ratio may have peaked at 96-to-1 in March 2020, and now may be in the process of correcting back toward the recent historical average near a low of 45-to-1. If so, this may present a major buying opportunity today - in both gold and silver - as well as for our clients who own a Precious Metals IRA.

Owning physical gold as “wealth insurance” is the bedrock of every diversified portfolio. Along with providing portfolio safety, gold has quietly outperformed every other major asset class so far in the 21st Century, as I explained here.

The ratio trading strategy explained in this report is best suited for those individuals willing to consider moving a portion of their gold holdings into silver, with a goal of more aggressively seeking profit potential. Owning silver is not a replacement for gold, but it can complement portfolio safety and growth potential.

Of course ALL investments have risk, including gold and silver. I hope you will invest a few minutes to explore the Gold-to-Silver Ratio trading strategy with your representative today. -CRS

Please contact your Swiss America representative at 800-289-2646 to discuss how best to maximize this historic precious metals buying opportunity today!


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