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Pressing Questions Asked by Gold &
Silver Investors...
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We get lots of questions from the
public about precious metals.
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Some people are curious
about the basics.
Others are skeptical about
the case for owning gold and silver. Still, others are longtime customers who have
highly specialized inquiries.
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Here are two very common questions...
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QUESTION: What Is the
Gold:Silver Ratio and Why Is It Important?
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ANSWER: Simply put, the
gold:silver ratio measures how many ounces of silver it takes to buy one ounce of
gold at any given time. Investors who are considering how to allocate their wealth
between the two metals may want to favor gold when the ratio is low and favor
silver when it is high.
The ratio ranged between 80:1 and 90:1
throughout most of last year???s trading. It got as high as 130:1 during the height
of the pandemic panic of 2020. Today it stands at just under 90:1.
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Although the gold:silver
ratio is below its all-time high, it remains highly elevated on a historical
basis. In 2011, gold sold for as low as 32 times the price
of silver.
Going back many decades, a
ratio of 16:1 has been observed.
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If the gold:silver ratio narrows and
moves toward historical benchmarks, that inherently means the silver
price is dramatically outperforming gold. Outperformance of silver tends to
happen during the latter half of a precious metals bull market.
Since silver tends to be the more
volatile of the two metals (amplifying gold???s gains on the upside as well as
gold???s declines on the downside), relative strength in silver tends to be a
bullish indicator for the entire precious metals complex.
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QUESTION: What Are the Key
Differences Between Coins and Rounds… Which is Better?
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ANSWER: Coins are typically
issued by government mints such as the United
States Mint, the Royal
Canadian Mint, the Perth
Mint (Australia), and others.
Coins typically carry an official face
value and are considered legal tender in the countries that issue them.
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In the first 80 years of
our nation???s history, private mints produced various dollar denominations of gold
and silver coins – until the federal government seized a monopoly on minting
of coinage.
Rounds are standardized
bullion items that are minted (or ???coined???) by private
mints and come in a variety of designs that may or may not emulate the
appearance of traditional coins.
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Unlike coins, rounds are not typically
recognized as legal tender (though they can legally be used in barter transactions
based on their metal content). Most silver rounds are made of .999 pure silver
– the exact same weight and purity as U.S.
Silver Eagle coins.
However, rounds sell at a large
discount to Eagles and at still-meaningful discounts to most silver coins issued
by foreign governments. For investors looking to acquire the most metal for their
dollar, rounds are the better buy.
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This copyrighted material may not
be republished without express permission. Offer only available through email
promotion. Offer does not apply to previous orders and may not be combined with
any other offer or program. Special shipping rates or other restrictions may apply
to international orders. The information presented here is for general educational
purposes only. Money Metals Exchange and its staff do not act as personal
investment advisors. Nor do we advocate the purchase or sale of any regulated
security listed on any exchange for any specific individual. While our track
record is excellent, investment markets have inherent risks and there can be no
assurance of future profits. You are responsible for your investment decisions,
and they should be made in consultation with your own advisors. By purchasing from
Money Metals, you understand our company is not responsible for any losses caused
by your investment decisions, nor do we have any claim to any market gains you may
enjoy. Money Metals Exchange is not a regulated trading ???exchange??? as defined by
the CFTC and the SEC.
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