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Current Gold:Silver Ratio
Track the very latest gold to silver ratio with our up-to-the-minute interactive chart. Our gold and silver prices are updated every 30 seconds, allowing you to make informed decisions on timing your purchase or sale.
Use our gold/silver ratio chart to analyse the historical data of this much coveted relationship. Data can be viewed in 3 major currencies over several time periods to understand if today’s gold silver ratio represents a trading opportunity.
If you’re thinking of buying silver coins or bars when the ratio hits a certain high for example, why not use our notification tool to alert you once it touches that level. That way you will be informed within a minute of the ratio being hit and you won’t miss out
What is the gold to silver ratio?
The gold to silver ratio is a measure of the relative value between gold and silver.
It refers to the quantity of silver that could be purchased with the same money it takes to buy one ounce of gold. For example, if the ratio is 50:1, then an investor could buy 50 ounces of silver for the same price as one ounce of gold. The ratio at the beginning of 2023 stood at around 85:1.
How is the ratio calculated?
The gold silver ratio can be worked out simply by dividing the current gold price by the silver price.
The only rule to calculate this is that the basis of each price has to match. When calculating the ratio, ensure to use the same weight, currency and timeframe for each metal. So for example, divide the current spot price of gold in ounces in GBP, by the current spot price of silver in ounces in GBP.
It’s worth mentioning that this ratio doesn’t account for the difference in Value Added Tax (VAT) treatment towards the two metals. While investment grade gold is exempt from VAT, purchasing silver coins or bars is not. So if you’re using the gold to silver ratio as a tool to help with the optimum timing of a physical silver purchase, you will actually need to factor in this 20%, narrowing the ratio.
Electronic purchases of silver like an ETF or spread trading won’t be impacted by VAT.
Why is the gold to silver ratio so high?
With the current ratio at around 85:1, many view this as being high when compared to the average of the past century of 47:1. It also appears high when considering the current ratio sits towards the top end of the all-time historical variance of 10:1 to 115:1.
The gold to silver ratio is currently high for several possible reasons. Firstly, the price of the two metals is currently not set or pegged, like it has been during previous periods. Therefore the ratio has the freedom to find its own level, however high or low that may seem.
Secondly, it appears that gold remains more impactful on the ratio than silver. So while demand for silver in industry is incredibly high when compared to 50 years ago, the continued economic fallout from Covid, high inflation and political unrest has led to high demand for gold as a safe haven asset. Silver may be playing catch up with gold, but when investors are scared, gold is still the undeniable winner of the two metals.
Changes in mining methods of gold and silver and the price of production also impact the current wide ratio.
Finally, while there’s no clear evidence, many conspiracy theorists still claim the silver price is manipulated by a small number of powerful institutions to remain low, consequently widening the ratio. With the silver market being less developed and smaller than gold, price suppression is more feasible.
Is the gold/silver ratio important?
The value of tracking the ratio is a highly contested issue. Many market analysts and investors argue its importance because it provides insight into the demand and supply dynamics of these precious metals.
The gold to silver ratio is often used by investors to determine which metal is more undervalued or overvalued. When the ratio is high, it means that gold is more expensive relative to silver and may signal that silver is ‘cheap’. Conversely, when the ratio is low, it means that silver is more expensive relative to gold and may be a sign that gold is undervalued or that silver is expensive.
For example, in March 2020, the gold to silver ratio hit a record high of around 115, which meant that it took 115 ounces of silver to buy one ounce of gold. This was due to the economic uncertainty caused by the COVID-19 pandemic, which drove investors towards safe-haven assets like gold more than silver. However, since then, the ratio has decreased, and as of February 2023, it is around 85.
What is a good gold to silver ratio?
While the ratio itself undoubtedly provides analytical insight into the price dynamics of the two metals, it’s contested whether this knowledge actually provides any benefit as to timing a purchase or sale. Afterall, it’s impossible to determine exactly what the ratio ‘should be’. Therefore how can we deduce what is cheap and what is deemed expensive?
Some investors will simply look at scarcity to calculate what a ‘good’ gold to silver ratio should be. On that basis, the amount of gold and silver existing in the earth’s crust would suggest an equilibrium of 16:1. This simple snapshot ignores important influencing factors such as ease and economics of extraction, demand for each metal and economic sentiment.
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How can the gold silver ratio benefit investors?
Investors frequently use the gold to silver ratio to make strategic investment decisions.
For example, if the ratio is high, investors may choose to buy silver, as it may be undervalued compared to gold. Conversely, if the ratio is low, investors may choose to buy gold, as it may be undervalued compared to silver.
There are a couple of dangers to this investment policy. Firstly, as with using any historical data, just because the gold silver ratio is currently high compared to previous levels, it doesn’t mean that the ratio won’t continue to rise. World events have been so extreme in recent years that all asset prices have reacted in unprecedented ways. Who knows what would happen to the gold and silver ratio if the world economy became even more severe – perhaps with the collapse of the current fiat money system.
Secondly, we always recommend that investment decisions be based on fundamental rather than technical reasons. Technical analysis such as the gold to silver ratio can be used to help with timing but shouldn’t be the decisive factor when choosing whether to buy gold or silver.
Fundamentally, an investor may be more suited to investing in gold as they are risk-averse and seeking a hedge. In this case, it would be foolish to buy silver instead, purely based on the ratio suggesting it’s currently undervalued. Choosing which precious metal to buy should be based on which one will most likely suit the buyer’s investment objectives.
History of the gold to silver ratio
Historically, gold has always been more valuable than silver. This is because gold is scarcer than silver, which impacts its supply/demand dynamic and as a consequence its price.
This was reflected in ancient Greek times when both metals were used in the production of coins 2,500 years ago. Back then the value of the two metals compared at a ratio of 10:1. With transport being much slower than today, the actual prices would vary depending on the proximity and transport cost to the respective mines.
Due to their use in monetary exchange, many governments officially set the gold to silver ratio to provide stability to coinage value. The Roman Empire fixed the ratio at 12:1 and the US government set it at 15:1 towards the end of the 18th century. Leaving the prices open to natural market mechanics has led to increased volatility and disparity between the values, with the all-time peak in 2020 of 115:1.
The average gold silver ratio over the past century can be put at around 47:1. This can provide a sound benchmark to gauge the current level as it covers a a relatively long timeframe during ‘modern times’.
What moves the gold-silver ratio
The ratio has changed and evolved over the years, being impacted by many factors including demand, economic backdrop and sentiment.
Gold is often used as a store of value and as a hedge against inflation. It is also used significantly in jewellery and in the electronics industry. Silver, on the other hand, is more plentiful and is often used in industrial applications, such as in solar panels and in electronics. This is due to silver being the most electrically conductive metal on earth. For this reason, silver is the preferred choice in mobile phone circuits, electrical switches and many other electronics.
The gold to silver ratio is not fixed and can vary over time. This is because the price of gold and silver are determined by supply and demand factors, which can change depending on economic conditions and investor sentiment. When investors are optimistic about the economy and the stock market is performing well, demand for precious metals may decrease, leading to lower prices for both gold and silver. Conversely, during times of economic uncertainty and market volatility, demand for precious metals may increase, driving up the prices of both gold and silver.
Many ‘silver bugs’ will argue that the silver price will soar of the coming years, as the new digital industrial age becomes increasingly entrenched. Silver’s many industrial and electronic applications will see demand for the metal soar, pushing up its price and narrowing the ratio. This is supported by the notion that many uses of silver actually expire the metal, in other words, it cannot be used again. So unlike gold, the world’s supply of silver actually diminishes on a daily basis.
In conclusion, the gold to silver ratio is an important metric for investors in the precious metals market. It provides insight into the relative value of gold and silver and can help investors make informed decisions about their investments. While the ratio is not fixed and can fluctuate over time, it remains a useful tool for investors looking to capitalize on the market dynamics of these two precious metals.
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