Understanding the gold silver
ratio
View our comprehensive presentation on one of the most followed
ratios in the precious...
What is the gold silver ratio?
The gold silver ratio is a tool for
measuring the value of one
precious metals relative to
...
Over time gold silver ratios have changed greatly, even if for most
of history 15:1 has been the average, with gold buying...
Gold silver ratio plotted over time
When the gold silver ratio hits highs of towards a 100:1 ratio, this
indicator is telling us that the markets are risk ave...
When the gold silver ratio sits at low levels in the 30s and 40s, this
silver investment indicator is telling us that the ...
The gold silver ratio is indeed a useful bullion investment indicator,
with a deep history and the potential to offer lots...
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Understand the gold silver ratio

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Use this comprehensive presentation from The Real Asset Company to properly understand what the gold silver ratio is, how it can affect your gold investing, and explain moves in gold and silver prices.

Published in: Economy & Finance, Business
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Understand the gold silver ratio

  1. 1. Understanding the gold silver ratio View our comprehensive presentation on one of the most followed ratios in the precious metals markets.
  2. 2. What is the gold silver ratio? The gold silver ratio is a tool for measuring the value of one precious metals relative to another. When the ratio is high (>60) it suggests gold’s purchasing power is stronger than silver’s. When the ratio is low (<20), silver’s purchasing power is shown to be stronger relative to gold’s.
  3. 3. Over time gold silver ratios have changed greatly, even if for most of history 15:1 has been the average, with gold buying 15 times as much silver. In medieval Japan ratios of 3:1 were typical, whilst in Ancient Egypt, ratios of 2:1 were the norm. These dynasties had limited silver mines, meaning the restless metal was relatively more prized within their borders. In the last 40 years the ratio has averaged over 52:1, whilst modern day ratios peaked in the early 1990s at over 100:1. The lowest ratio, post 2000, was just over 30:1, when silver surged to $45/ounce in April 2011. Large moves in the gold silver ratio are normally driven by rapid price moves in more volatile silver bullion. Historical gold silver ratios
  4. 4. Gold silver ratio plotted over time
  5. 5. When the gold silver ratio hits highs of towards a 100:1 ratio, this indicator is telling us that the markets are risk averse, that we may be in recession, and that investors perceive danger. During these times capital flows towards gold bullion are relatively larger as safe havens shine, and investors flee more speculative assets like silver bars. During the recession of the early 1990s, the gold silver ratio briefly exceeded 100:1, confirming the market’s mood of the time. High gold silver ratios – what do they mean?
  6. 6. When the gold silver ratio sits at low levels in the 30s and 40s, this silver investment indicator is telling us that the markets have an appetite for risk, that stock markets are rising and maybe peaking, and that investors are willing to bet on economic prosperity. During these times capital flows towards gold bar investments wane, as safe havens are deemed less appealing and assets like silver bullion attract fervour and increasing amounts of money. During silver’s meteoric rise in mid-2010 to early 2011, silver prices went parabolic nearly touching all time highs of >$50/ounce, resulting in the gold silver ratio bottoming at 30:1. Low gold silver ratios – what do they mean?
  7. 7. The gold silver ratio is indeed a useful bullion investment indicator, with a deep history and the potential to offer lots of insights. However, technical analysis of charts and ratios is not perfect, and investors should not bank on something happening because ‘the gold and silver ratio says so’. You might be best served to enjoy using the gold silver ratio as an interesting footnote to your investing, comparing long term levels of gold and silver prices and helping you understand how the two precious metals’ prices are moving in relation to each other. Ending notes

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