Gold Silver Ratio Spikes Through 100 Year High

The gold / silver ratio. It’s simple: Take the price of an ounce of gold and divide it by the price of an ounce of silver. Presto; the resulting number is the gold / silver ratio.

104 Gold Silver ratio

The ratio is most useful at its extremes. When the ratio has topped 80, it has signaled a time when silver was relatively inexpensive relative to gold. Silver went on to rally 40%, 300%, and 400% the last three times this happened.

Likewise, the three times the gold / silver ratio has fallen below 20 in the past, it has marked a period when gold was relatively inexpensive compared to silver.

This is the best of savvy investment strategy; take a simple mathematical equation and track historical price behavior. When relative valuations hit extremes and then revert to historical means time and time again, we seek to buy these temporary under valuations and wait for their inevitable pendulum swing in the opposite direction.

Adapted from GoldSilver.com

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.