Gold vs. Silver: There Is No Debate
by: Market Sniper May 28, 2009
Market Sniper picture Market Sniper

It is mildly amusing that when the precious metals markets are in confirmed uptrends, the perennial debate of whether it is best to own gold or silver always comes to the fore.

Both gold and silver, historically, have been money (merely utility in exchange). Gold in nature is approximately 15 times as scarce as silver. All the gold mined since the dawn of man, if molded into a cube, is said to fit inside a baseball diamond. Silver would nearly fill the stadium. China, now the world’s largest gold producer, had a silver standard as gold was more plentiful in China than silver, a bias that the west took full advantage of up through the 1870s. Silver imports by the Spanish Empire from their New World holdings were so large that it collapsed the European silver market. England, then on a bi-metalic standard, quickly switched to a pure gold standard. The Spanish Empire never recovered from the experience.

In the United States, the debate raged incessantly as to how the ratio would be “fixed” after the discovery of the Comstock Lode with western mining interests’ best known champion, Senator William Jennings Bryan, being the foremost proponent of a lower ratio. Seems it is an old debate. The good news is, you can own both. If/when the world returns to honest, stable money, you will need both: gold for the larger acquisitions and silver to make change.

While we await such an event, ratio trade the two metals to increase your holdings of precious metals.The ratio fluctuates wildly over time. In the 1970s and 1980s I used 28:1 and 40:1 as points that I would switch. At 40:1, I would be in silver. When the ratio dropped down to 28:1, I would exchange silver holdings for gold. Each time I switched, my stack of precious metals would increase in size even after dealing with the spread.

Find a precious metals dealer who will work with you on that. You maybe able to locate one that will only charge the spread on one of the metals and not both when you switch. Since then, the ratio has moved up. At one point it was even at 100:1. I now use 45:1 and 70:1 as switch points. See your tax accountant as to the benefits of such a program. Think 1031 Tax Deferred Exchange.

For those who do not want to break the rear axle of your automobile moving your silver when it comes time to switch, think about using ETFs that only reflect the price of the two metals. There are a variety of ways to accomplish this, from being in just one or the other to being long one and short the other. IF your objective is to accumulate the actual physical metals, do not use ETFs as a substitute for physical ownership. Rather, take profits from your switching trades and purchase the actual metals themselves. Gold vs. silver? No debate. Accumulate both.

Disclosure: long physical silver and gold

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I’ve held this little beauty for almost 12/12 nice to see such good results… reminds me of AZS stuff.

New High-Grade Vein Discovery at Bajo Negro
Exploration Update | Drilling Report
May 19, 2009, Perth Australia — Andean Resources (AND:ASX; AND:TSX) is pleased to report new and potentially significant results from deeper drilling completed at the recently drilled Bajo Negro vein at its 100% owned Cerro Negro gold and silver project in Southern Argentina. Today’s results include the following:
• BRC-908 intersected 6m of 23.9 g/t gold and 22 g/t silver
• BRC-911 intersected 7m of 60.7 g/t gold and 90 g/t silver
• BDD-913 intersected 7.75m of 38.9 g/t gold and 45 g/t silver
• Drilling to date has tested the structure over a strike length of approximately 350m coincident with a north-west trending geophysical lineament of almost 5 km
• The results received so far show a rapid and consistent increase in the strength of mineralization with depth
Reported widths are intersected widths, and true widths are less in every case (see Table 1 for detailed drill data). Andean has assumed an underground cut-off grade of 2.5 g/t gold at Bajo Negro for all the interval summaries reported in this release.
Bajo Negro Vein Discovery
Since the start of the year and at the completion of the infill drilling campaign at the Eureka West veins, Andean’s exploration team have used one drill rig to test some of their highest priority targets on the highly prospective Cerro Negro land position. The Bajo Negro vein is located 13 kilometers east of the Eureka West veins and 2 km south-west of the Vein Zone deposit (see Figure 1).
The Bajo Negro vein, identified in 2006, displayed only sporadic surface outcrop extending over 100m in a north-westerly direction. Trenching and surface sampling resulted in a range of gold grades from anomalous to 3 g/t gold and increased the known strike length to 350m.
To-date, twelve RC holes and one core hole have been drilled along approximately 350m of strike length of the Bajo Negro vein. The mineralization remains open to the north-west, south-east and at depth. Results suggest a high grade gold zone below 750 meter elevation.
The following new intersections, taken in conjunction with previously-announced results, define the upper part of an ore shoot which is open to depth and along strike:
BRC-906: 2m of 26.1 g/t Au and 49 g/t Ag from 230m
BRC-907: 2m of 21.4 g/t Au and 35 g/t Ag from 232m
BRC-908: 6m of 23.9 g/t Au and 22 g/t Ag from 166m
BRC-909: 2m of 5.9 g/t Au and 6.5 g/t Ag from 113m
BRC-910: 5m of 5.2 g/t Au and 6 g/t Ag from 152m
And 4m of 8.5 g/t Au and 7 g/t Ag from 166m
BRC-911: 7m of 60.7 g/t Au and 90 g/t Ag from 160m
BRC-912: 8m of 8.5 g/t Au and 29 g/t Ag from 144m
BDD-913: 7.75m of 38.9 g/t Au and 45 g/t Ag from 204.5m
The first core (diamond) hole, BDD-913 supports the grade and thickness of the mineralization intersected by the reverse circulation holes. The Bajo Negro vein lies on an aeromagnetic lineament which extends NW and SE of the area currently drilled, for approximately 5 km. Geological evidence indicates that the present-day land surface has undergone minimal erosion from the surface at the time the vein was formed, suggesting the possibility of additional blind ore shoots along this trend.
The discovery of this new area of mineralization supports Andean’s view that significant exploration potential remains at Cerro Negro for the discovery of additional mineralization.
Next Steps
One drill-rig will shortly be moved to Bajo Negro. Proposed exploration includes:
• Continue drilling the vein at 50 meter centers along strike and at depth to further define the extent of mineralization present at Bajo Negro;
• Drill step-out holes, with a focus on the South East, on more widely spaced fences,
• Consider a gradient array resistivity survey of 100 line kilometer to explore aeromagnetic lineaments to the North West.
Andean is also finalizing a resource estimate on its Eureka veins, (where drilling continues), for release at the end of May. Since Bajo Negro has only recently been drilled, a resource update for this zone will be provided at a later date. The Company is planning to drill through the winter months for the first time with covered skid mounted diamond rigs. Drilling updates will continue to be provided.
In the above table, the Gauss Kruger coordinate system and the Campo Inchauspe datum are used to define drill hole collar positions. However on the longitudinal projection of the Eureka West Vein, the coordinate system refers to a local grid established for drilling the Eureka West Vein.
Quality Control and Assurance
The analytical results quoted in this release are derived from half drill core in the case of diamond drill holes, or from cuttings in the case of reverse circulation holes. Samples are prepared by ACME Analytical Laboratories SA (Mendoza) in Mendoza, Argentina, and assayed by the same laboratory in Santiago, Chile.
Gold is determined initially by fire assay with AA finish. Samples assaying more than 10 ppm gold are re-assayed using a gravimetric finish. .
Silver is determined initially by AAS, and samples assaying more than 100 ppm silver are re-assayed by fire assay with gravimetric finish.
Quality control of the analytical results is maintained by inserting standards, blanks, and duplicates into the sample run, approximately every twenty samples. Additional quality control is maintained by sending assay sample splits to a second laboratory from time to time. These checks are evaluated statistically at regular intervals.
All analytical data are entered into a Microsoft Access database, with limited access and numerous checks to ensure integrity of the data.
Andean Resources Ltd ( is an Australian and Toronto listed gold explorer searching for precious metals in the Andes, with four large property positions in the Patagonia

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When Gordon Brown and Peter Costello wantonly sold of their respective country’s gold they seem to have taken several other countries down according to today’s Daily Reckoning: “The second FT article said that “Gold sales cost Europe’s central banks $40 bn.” Central banks in France, Spain, the Netherlands, and Portugal followed Britain’s 1999 example and sold large chunks of their gold reserves when gold prices were around US$280. They sold around 3,800 tonnes of gold for around $56 billion, according to the FT. The FT reckons if they’d kept those gold reserves and not bought government bonds with the proceeds, those banks would be $40 billion better off. That would come in handy today, wouldn’t it?

As an aside, can you see how upside-down the world is? The ECB prints money to buy bonds. The Bank of England, the Bank of Japan, and the U.S. Federal Reserve all do the same thing. Meanwhile, central banks are selling a real tangible asset like gold. These people are supposed to be guardians of sound money with steady purchasing power? They seem to aiming for the exact opposite.”

Many people wonder if the Australian Gold mining community will ever fully recover from Costello’s actions.

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China’s gold reserves ‘top 1,000 tonnes’
25/04/2009 1:24:01 PM

China’s gold reserves rose 75 per cent from 2003 to 2008, state media said, reporting that Beijing now had the world’s fifth largest holdings of the precious metal.

China had 1,054 tonnes of gold by the end of 2008, up 454 tonnes from the 600 tonnes that it said it had in 2003, the last time it reported its reserve figures, Xinhua news agency said in a report Friday.

The new figures, released by the State Administration of Foreign Exchange, has been reported to the International Monetary Fund, Xinhua said.

China has adjusted its gold reserve holdings twice since 2000, raising the holdings from 394 tonnes to 500 tonnes in 2001, and to 600 tonnes in 2003, Hu Xiaolian, head of the administration, told Xinhua.

China holds the world’s largest foreign exchange reserves, which stood at $US1.954 trillion ($A2.74 trillion) at the end of March, up from $US1.946 trillion ($A2.72 trillion) in December, official data showed.

On Friday, gold prices raced higher on concerns about the US economy and strong Chinese demand.

By late Friday on the London Bullion Market, gold jumped to 909 dollars an ounce from 870.50 dollars the previous week.

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