Trading Up Silver

I got this neat idea of trading up silver for gold from this site:http://www.getting-positive-karma-now.com/india-bullion.html.Here is the crux of the tactic:-

Consider the chart below which shows the relative price perfomance of gold and silver in Indian Rupees.

This chart shows that over the past ten years gold and silver have appreciated more than 400% on a rupee basis. From 1998 to 2008 the gain was 200%. So in the following 2 years , the gains have been huge. The interesting thing is that silver (yellow line) has had a greater volatility in price than that of gold (blue line) in times of economic uncertainty, from 2006-2010.

Next consider the silver to gold ratio i.e. grams of silver required to buy one gram of gold. A couple of years ago the silver to gold ratio was 75:1. Now it has gone below 50:1. This ratio shows how relatively ‘expensive’ silver is.Optimistic experts believe that the ratio would eventually approach 16:1. Historically, over centuries,that has been the most long-held stable silver to gold ratio.It mirrors the relative scarcity of gold and silver in the earth’s crust.

Both gold and silver are precious metals.They appreciate in price in tandem over time.Silver in addition to being a precious metal,is an industrial metal too and so shows a greater price volatility.Moreover silver is cheaper than gold so when a person has a small budget he can still buy a sizable silver coin/bar when compared to gold.So a person can buy silver when the silver-gold ratio is favourable and sell it to buy gold when it becomes relatively cheaper.So a person can start with a small sum of money, grow it for a while at the higher rate at which silver appreciates from a low and then exchange it for gold when it becomes cheap vis-a-vis sliver.