Gold/Silver Ratio

What It Measures

The ratio shows how many ounces of silver are needed to purchase one ounce of gold. For example, a ratio of 75 means it takes 75 ounces of silver to buy 1 ounce of gold.

Historical Context

• Historical average: 60-70
• All-time high: 120+ (March 2020 COVID panic)
• Modern low: ~30-40 (strong economic growth)
• Pre-1900 average: 15-16 (when both were monetary metals)

Trading Signals

• High Ratio (>80): Gold expensive vs. silver. Historically a good time to buy silver or sell gold.
• Low Ratio (<40): Silver expensive vs. gold. Historically a good time to buy gold or sell silver.
• Rising Ratio: Risk-off sentiment, gold outperforming (investors seeking safety).
• Falling Ratio: Risk-on sentiment, silver outperforming (industrial demand, economic optimism).

Why It Matters

Gold is primarily a monetary metal and safe haven asset, while silver has both monetary and industrial uses (electronics, solar panels, medical applications). The ratio reflects the balance between safe-haven demand and industrial/economic growth expectations.