Curious about where you learned about the 500 year cycle.

I've known about a 500 year cycle for about 10 years now. Climate change cycle ( Warm/Wet, Warm/Dry, Cold/Wet, Cold/Dry ) and if I remember correctly, were about to enter into a Cold/Dry period. You didn't learn about it from one of Moira Timms books, did you?

Inter-Relationship Between Gold and Silver

Presented by:

Michael A. Simon

Director

I have been asked to speak on several aspects of the gold and silver markets today. I will address CPM Group's analysis of the gold and silver markets, outlining our analysis of where supply, demand, and prices have trended in recent years. I also will outline where we expect supply, demand, and prices to head in 1996 and beyond. Separately, I want to discuss the historical relationship between gold and silver.

Allow me to start with this last point.

The Historical Relationship Between Gold and Silver

Obviously, gold and silver are inextricably intertwined with each other. The metals clearly are related, in terms of physical properties, uses, and price movements.

The relationship is not as simple as many would believe, however. And, in terms of prices, there are no valid reasons to believe that the prices will ever do anything more than move tangentially together.

You will hear that the gold/silver price ratio ought to be 16 to 1, or 32 to 1, or some other supposedly magical number. In fact, there are no statistical bases for such conclusions. The amazing thing is that investors and dealers still trade based on the theory that the gold/silver ratio ought to be some specific number.

As my first slide shows, the gold/silver ratio has traded between 16:1 and 100:1 over the past two decades. There has been no consistent pattern. The ratio fell sharply in 1979, for reasons I will touch on shortly. The ratio then rose throughout much of the 1980s, reflecting the greater weakness in the silver market and the stronger interest in gold from jewelers and investors during this time. Since the beginning of 1993, the ratio has fallen some. After reaching a peak of 100:1 ( this slide shows monthly averages, which did not quite achieve this level, but on a daily basis the ratio did in fact hit this peak ) , the ratio has fallen as low as 70:1. This reflects the improved market conditions in silver, and the fact that the silver market has been tighter than has the physical gold market.

Historically, there were some times when the ratio was important. In the early 18th century, Sir Isaac Newton determined that the ratio of the price of gold to that of silver should be 16 to 1. Except for periodic suspensions of the metallic monetary systems, the gold/silver ratio stood at this level until the early 20th century.

The silver market was devastated in the Great Depression of the 1930s, leading to a point where this ratio expanded to 100:1.

For much of the time from 1945 until 1968, gold prices were fixed in dollar terms, while the U.S. Treasury worked to maintain silver prices below the $1.29 level at which it made sense to refine your silver coins for their metal content.

Since 1972, when gold and silver both were free of such government interference, prices have traded between 16:1 and 100:1, as I said earlier.

You will notice the dip down to 16:1 in 1979. This was the time when Nelson Bunker Hunt and his brother were active in silver. Mr. Hunt felt strongly that Sir Isaac Newton had been on to something real when he set the ratio in British coinage at 16:1. Therefore, Mr. Hunt traded gold and silver on the supposition or theory that the price ratio had to move toward this natural level. Since he had sufficient funds and influence in the market, his prediction became a self-fulfilling promise. However, he bankrupted himself in the process. Thus, the move to 16:1 was short-lived.

Following this incident, the silver market was in great disarray, and took the better part of the 1980s to re-balance itself. During this time, the ratio eroded sharply.

If you asked someone from CPM Group where we thought the gold/silver ratio would be in the future, we would develop a projection of gold prices, based on gold's supply/demand conditions and the underlying economy, then we would develop a silver price projection, based on silver's fundamentals. We would divide the gold forecast by the silver forecast, and give you our projection of the gold/silver ratio.

What is our forecast? We expect the ratio to drop to between 50 and 60, from the 70 - to - 90 range that has held for the past five years.

I read it and thought it an interesting viewpoint and forgot about it. Then I saw the October 4th Annual Environmental Media Awards. I took great interest as the keynote address was delivered by the President of Greencross International. None other than the venerable Mr. Mikhail Gorbachev.

I am reminded by one passage of his elucidations which struck within me a chord, reminding me of the above mentioned article. and I quote...

Ladies and gentlemen, I have had to make significnt changes in my schedule of activities...to travel 6,000 miles to you join you here on this wonderful night in Los Angeles. I will not hide from you the fact that I was under very strong pressure from a group comprising Diane Meyer Simon, Ted Turner and Jane ( Fonda ) , with a final push coming from Mrs. Gorbachev. It was a kind of international conspiracy to bring me here. I know something about conspiracies. This time I decided to yield to that conspiracy - for the first time - because that was a coalition which no president in the world would have been able to resist.

The line which really got me was: The time has come for mankind to accept the wise philosophy of Native Americans.

I know a little about the environment, and I know a little about conspiracies. If you wanted to veil something behind a mission for the planet, and then spread the word to save peoples children, hmmm, the environment. Yeah, that's the ticket.

I wanna know when this clown traded in his borsht for creamed maize. What, one day he woke up, traded his red pajamas for green ones and decided to do all he could to make the west see the horror of their ways, and of course, he is in a great position to do so, because he has seen the light himself and is now devoid of his previously evil ways.

Hmmm, and just think, we can fund this movement through non-profit tax free devices, hmmm. O'tay, I am a changed man, my mission is to save the world from itself and people who used to think the way I did before I discovered organically grown corn.

Pardon the soapbox, please. But, I believe in clean air, water too. However, but not the way Uncle Al and Gorby have set it into motion. And I was never Fonda Jane, I just wonder how she ended up in bed with Ted.

The dollar dropping like a rock is for this and many other reasons a foregone conclusion in my mind.

I wonder what will happen when Uncle Bill tells the American people he has to raise taxes so the govt can keep running.

money is whatever people say it is Not True! Currency is whatever a government says it is Ture!

There are nine more words in the quote, I stopped it where I did for this exercise.

Gold is the only money the world has ever known.

I agree, it is simple. End of story.

Currency is whatever a government says it is True!

Not true, I disagree! Not in the Union of States known as the United States! In our constitution, ( Article 1, Sec 8 ) , we gave Congress authority to coin money.

End of story, everything else that has been done is a direct alteration of the Constitution. Plain and simple.

There was never a submitted proposal to amend the Consitution wherein the people agreed to paper money instead of gold and silver.

Please excuse the strident tone. I have alot of respect for the opinion peelers and the others discussing the LBMA dealings.

But, we the people never agreed to paper and we never agreed to give up the only real money the world has ever known, gold and silver.

Currency is whatever a government says it is The only reason this statement can be made is due to the fact that we the people have not demanded our Constitutional rights be enforced.

The quote goes something like, the only way evil can succeed is if good men do nothing.