DYI: Something is afoot; my guess it will begin in Europe as their banks implode and a few EU members are either kick out or leave.

This 4,000-year old financial indicator says that a major crisis is looming

But given that gold is still traditionally seen as a safe haven, the ratio tends to rise dramatically in times of crisis, panic, and economic slowdown.

Just prior to World War II as Hitler rolled into Poland, the gold/silver ratio hit 98:1. 

In January 1991 as the first Gulf War kicked off, the ratio once again reached 100:1, twice its normal level. 

In nearly every single major recession and panic of the last century, there was a sharp rise in the gold/silver ratio. 

The crash of 1987. The Dot-Com bust in the late 1990s. The 2008 financial crisis.These panics invariably led to a gold/silver ratio in the 70s or higher. 

In 2008, in fact, the gold/silver ratio surged from below 50 to a high of roughly 84 in just two months. 

We’re seeing another major increase once again. Right now as I write this, the gold/silver ratio is 81.7, nearly as high as the peak of the 2008 financial crisis.

 In modern history, the gold/silver ratio has only been this high three other times, all periods of extreme turmoil—the 2008 crisis, Gulf War, and World War II.

This suggests that something is seriously wrong. Or at least that people perceive something is seriously wrong.

Good times never last forever, especially with governments and central banks engineering artificial prosperity by going into debt and printing money. 

So while the gold/silver ratio isn’t any kind of smoking gun, it is an obvious symptom alongside many, many others. 

Now, the ratio may certainly go even higher in the event of a major banking or financial crisis. We may see it touch 100 again. 

But it is reasonable to expect that someday the gold/silver ratio will eventually fall to more ‘normal’ levels. 

In other words, today you can trade 1 ounce of gold for 80 ounces of silver. 

But perhaps, say, over the next two years the gold/silver ratio returns to a more historic norm of 55. (Remember, it was as low as 30 in 2011) 

This means that in the future you’ll be able to trade the 80 ounces of silver you acquired today for 1.45 ounces of gold. 

The final result is that, in gold terms, you earn a 45% “profit”. Essentially you end up with 45% more gold than you started with today. 

So bottom line, if you’re a speculator in precious metals, now may be a good time to consider trading in some gold for silver.

DYI Comments:  Absolutely agree with the article.  For those of you who hedge traditional portfolios (stocks & bonds) with physical gold and silver this appears to be an appropriate time to reduce your gold holdings for silver.  This will also reduce Dollars invested to hedge leaving additional savings for stocks and bonds.

Something is afoot; my guess it will begin in Europe as their banks implode and a few EU members are either kicked out or leave.  Two obvious choices are Greece being thrown out and the U.K. citizens telling Brussels' where to stick it!  Combine that with 1st world markets that are in bubble land and the U.S. teetering recession.

Hang onto your head while everyone else is losing theirs.

THE GREAT WAIT CONTINUES

DYI