In times of fiat, i.e. when monetary metals are not in circulation, sensible people obtain Gold and silver for wealth preservation – as a means of 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 fiat. At some unknown point that will change.
When the rush 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 guesstimate 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 Gold-bugs: 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.
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 then reverse and dramatically narrow as people begin to swap much of their Gold for silver.
There will be great Gold/silver trades along the way for those so inclined.
These are some of the longer-term trading points.
1 Pre-collapse Accumulate Gold
2 Panic out of fiat begins Hold mostly Gold
3 Great migratory movements begin Exchange Gold for silver
(silver too heavy to carry – ratio widens)
4 Marketplaces re-form Exchange silver for Gold
(Silver in demand – ratio narrows)
5 Chaos begins to subside; ratio stabilises Hold Gold
If you are not inclined to trading, then just sit tight. You should still do far better than most.