The GSR index (Gold/Silver Ratio) or Comparison of the current prices of gold via silver
The GSR (Gold/Silver Ratio) or the comparison of the current price of gold, denominated in silver, and the current price of silver, denominated in gold.
The total ratio of silver and gold, suitable for mining, is 1:15. However even in the Roman Empire it was possible to exchange one golden coin for 15 or 16 silver coins. Today the gold/silver ratiois 1:75. You can see it clearly on the GSR Charts
But such a disproportion of prices and resources can't last forever. Unlike gold, silver is actively consumed by plant facilities, manufacturing solar cell panels, flat LCD screens, polymers etc.
On the silver investment market there're lots of rules and patterns just like on any other market. This is one of them: if the price of gold increases by 10%, the price of silver increases by 20%. However, if the price of gold decreases by 10%, the price of silver also decreases by 20%. Thus and so, investors often use expressions like these:
«Investments in gold are like a Mercedes. Investments in silver are like a Ferrari».
«If you expect the price of gold to grow then buy silver. If you expect it to drop, buy US Dollars».
The above-mentioned diagram shows, that in the year 2010 the GSR ratio was 60 and even higher than that. However, in 2011 it was only equal to 30. Some investors exchanged their gold for silver in 2010, receiving 60 silver coins for every golden one. In 2011, when the GSR ratio was 1:30, they made a reverse exchange and received a golden coin for every 30 silver coins.
Thereby, in 2011 these investors got 2 golden coins for every 60 silver coins, increasing their profits up to 100%/year in physical gold. That is, in 2010 an investor had 100 golden coins, but after this transaction in 2011 he doubled his stock and ended up with 200 golden coins.
Above you can see a «laboratorial» example of investment profits' calculations with an ideal points of market entry and well-timed leaving of the market when dealing with both kinds of assets. This example doesn't include investor's additional expenses connected with taxes and commission fees either. However an annual profit in physical gold equal to 60%, 40% or even 20% can still be considered a brilliant result, no bank in the world can make such an outstanding offer.