Gold/Silver Ratio Tops 80 to 1

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Silver bulls have been perplexed by gold's outperformance amid all the financial tumult recently. And now that ratio's crossed above 80 to 1, there are renewed calls for a surge in silver demand. This time, however, the demand is seen coming from holders of gold, who seem ready, according to some wags, to swap yellow metal for white.

With all the gasping and panting recently, it might have been easy to miss the milestone reached in the metals market. The gold/silver ratio has made new highs. The early London fix on Friday had the ratio at 78-to-1; by midday Monday, the ratio had climbed to 81-to-1...

Silver bulls have been perplexed by gold's outperformance amid all the financial tumult recently. And now that ratio's crossed above 80 to 1, there are renewed calls for a surge in silver demand. This time, however, the demand is seen coming from holders of gold, who seem ready, according to some wags, to swap yellow metal for white.

The trouble is, the cash metal market is tight. VERY tight. Premiums for bullion and bullion coins in the retail market are high - if there's any inventory to be had at all - to frustrate those would like a "trade-in."

Futures now seem to be the only place to swap the metals near spot prices. Oh, I know there are the gold and silver grantor trusts such as the SPDR Gold Shares (NYSEArca: GLD) and the iShares Silver Trust (AMEX: SLV), but to make or take delivery through them, you need to be able to swap in or out the equivalent of 50,000 or 100,000 shares. You got that kinda size?...

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