REAL ASSET RETURNS

GOLD/SILVER RATIOEDUCATIONAL CONFERENCE CALL

What’s the Gold/Silver Ratio?

• Simply: Gold price divided by silver price• What does it tell you? How many silver ounces

needed to buy one ounce of gold• Easy to calculate: Anyone can do this, anytime• Gold and silver prices vary, so the ratio changes

constantly• Charting the ratio: By plotting the ratio over time,

you get sense of its progression (trend)

Why do we track the Gold/Silver Ratio?

• Knowing where we are versus where we were offers great perspective

• Tells us if gold is cheap/expensive relative to silver, or if silver cheap/expensive relative to gold

• Helps with timing when buying or selling silver and gold

History of the Gold/Silver Ratio

• Long term historical average: 16 silver to 1 gold until late 1800’s

• Since then, has averaged closer to 50 to 1• But at end of last precious metals bull market

in 1980, ratio reached 20 to 1• In January 1980, gold peaked $800, silver

peaked $40: 20 to 1• My target in this bull market: 20 to 1

Gold/Silver Ratio in Current Bull Market

• Before Financial Crisis, Gold/Silver Ratio averaged 55 to 1

• Floated between high 60 to low 45• Trended down before 2008 stock panic• At height of the panic, surged to 85 to 1 • Silver was real bargain relative to gold!• Gradually worked back down to 55:1 over the

next two years

Recent Action Gold/Silver Ratio• When the ratio goes up, silver gets cheaper relative to gold• Chart of past three years:

• Quick drop from late 2010: Silver exploded from $18 to $48 by May 2011 (eight months later). That’s a 167% gain!

Where Could Gold/Silver Ratio be Headed Near to Mid-term?

• I believe silver will catch up to gold in the next seven or eight months• Ratio seems to have topped out around 58• Could continue its trend back down to 33, like when silver last topped at $48• Gold at $1,900, Gold/Silver Ratio of 33 implies: • $1,900 / 33 = $57, my silver target first half 2013

Summary: Gold/Silver Ratio• A great tool to determine relative attractiveness

of gold and silver• But a tool to be used along with others • Easy to calculate by anyone• Long-term historical average: 16• Currently around 52• Look for it to head back to 33 by mid next year• Maybe even down to 20 within this precious

metals bull market• Look forward to much higher silver prices!