The gold to silver ratio has long been used by investors as a tool to determine the price relationship between gold and silver and how the prices of these precious metals compare relative to historical norms. The ratio simply determines how many ounces of silver that it would take to purchase one ounce of gold. At today’s prices of $19.50 per ounce for silver and $1288 per ounce for gold, the current gold to silver ratio stands at just over 66.

An understanding of the historical significance of the gold to silver ratio allows investors to gauge which of the two precious metals is overvalued, or conversely undervalued, compared to the other. Historically, the gold to silver ratio has fluctuated between 14 and 100, with the last five years seeing a low of 32 and a high of 72. The current gold to silver ratio of 66 is an indication to many investors that we are likely approaching the high end of the range, and that given a silver price still under $20 an ounce and industrial demand for silver growing as well, a move lower in the gold to silver ratio is close at hand.  What this means for you is that a correction is coming, and trading gold for silver, or buying silver while the ratio is so high makes sense.  Expect the price of silver to jump when the ratio correction occurs.

Only time will tell if and when the gold to silver ratio will revert back to a historical norm, but the fact remains that silver is now, by historical standards and relative to gold, inexpensive. At under $20 an ounce it looks as if now is the time for those looking invest in silver to load up on silver and take advantage of the current low prices, as illustrated by the useful and historically relevant gold to silver ratio.
Historical gold to silver ratio

As a bullion bank, we are able and willing to accomplish any metals trades you wish to do.  Historically, when the ratio is as high as it is currently, the trend is to trade gold into silver.  That way, when the correction occurs, you can take the higher priced silver and trade it back into a lower priced gold, anticipating an increase in the ratio pushing the price of gold higher again.  Call us today!

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