In times of fiat, when the monetary metals are not in circulation, sensible people obtain Gold and silver for wealth preservation – as a means of reliably transporting their present value into the future. While Gold is the only stable value, the market is aware, at a visceral if not intellectual level, that silver acts as its surrogate.
The major difference for why people select either Gold or silver is in the status of the wealth holder. Those with a lot of fiat, choose Gold; those with not so much, choose silver.
Times seem fairly benign to most at the moment and, generally speaking, there is little urgency to sell fiats. At some unknown point that will change.
When the rush to exchange fiat for the monetary metals begins in earnest, and because of the reason above, there will be far larger amounts of fiat chasing Gold than silver. My guess would be in the order of thousands of dollars chasing Gold, to each single dollar chasing silver.
Practically, what that means is that fiat will fall faster against Gold than it will against silver. In other words, the Gold to silver ratio will widen dramatically. Translation for the monetarily unaware: the ‘price of Gold’ (as measured by fiat) will have a much steeper rise than the price of silver.
Evaluation of the technical factors or fundamentals will be irrelevant at that point. We will have exited the current paradigm.
While the Gold/silver ratio will dramatically widen, at a later point when the marketplace begins to re-emerge, silver will again be sought as the day-to-day currency. The Gold/silver ratio will reverse and narrow as people begin to swap some of their Gold for silver.
As some of you will have figured out, there will be great Gold/silver trades along the way for those so inclined.
This will likely be the largest trading opportunity of all.
1 Pre-panic Accumulate Gold
2 Panic out of fiat begins – ratio widens
(far more fiat chasing Gold than silver) Hold Gold
3 Collapse causes great migratory movements.
Silver is too heavy to carry and will be swapped
for Gold. Ratio widens to its peak Exchange Gold for silver
4 Marketplace re-forms
The demand for silver to facilitate the exchange of
goods causes the ratio to dramatically narrow Exchange silver for Gold
5 Chaos begins to subside; ratio stabilises Hold Gold
These trades will see the making of new fortunes by new families – doubtless accompanied by new conspiracies. If you are not inclined to trading, or are not able to securely store a large volume of silver, then just sit tight. You will still do far better than most.