The silver-gold ratio has climbed back above 80-1. This has historically signaled silver on sale.
As I write this article, the ratio stands at just over 80:1. That means it takes just over 80 ounces of silver to buy an ounce of gold. To put that into perspective, the average in the modern era has been between 40:1 and 50:1.
The analysis last month showed that selling exhaustion may be near in the gold market. Since then, gold continues to be range-bound between $1750 and $1800 running up against both solid resistance and support. Meanwhile, silver has shown a mini-breakout.
The $1800 level for gold is in play this week and could open the door for a big move if it gets through it soon.
This analysis focuses on gold and silver physical delivery on the Comex as we move from September into October. See the article What is the Comex for more detail.
The silver-gold ratio has ballooned again, indicating that silver is once again a bargain buy.
During a gold bull market, silver typically outperforms gold. We saw this during the big runup in the price of both metals through the early months of the pandemic. In the third quarter of last year, silver charted its best quarter since 2010, finishing up 27.62% through the three months ending Sept. 30. Going back further, silver spiked 106.6% off its March 2020 low.
Silver just had its biggest monthly gain in nine years.
The spot price of the white metal went into May at $14.96 per ounce and closed on May 29 at $17.98, a 20.7% increase. Silver futures did even better, with the price of silver for July delivery hitting $18.50 per ounce Friday.
Silver has finally joined gold at the party.
In the last week, the price of the white metal has moved up from $15.51 to $17.35. (as I type this on Tuesday morning May 19) That’s an 11.9% increase.
With the jump in the price of silver, the silver-gold ratio has dropped from over 113-1 earlier this month to 101-1 today.
Silver hasn’t been this cheap compared to gold in 5,000 years of human history. What is the silver-gold ratio telling us? Is silver about to shine?
We have financial records dating back some 5,000 years and in all that time, silver has never been this cheap compared to gold.
Kanesh was an important trading hub in the Assyrian empire. The city was located in the middle of what is now Turkey, at the midpoint of the route between the Mediterranean and the Black Sea.
The silver-gold ratio has ticked back up to historically high levels of late.
As I write this article, the ratio stands at just over 88:1. That means it takes 88 ounces of silver to buy an ounce of gold. To put that into perspective, the average in the modern era has been between 40:1 and 50:1.
In simple terms, historically, silver is extremely underpriced compared to gold.
Many of SchiffGold clients hold silver patiently waiting for a drop in the silver to gold ratio. I am very much one of these patient holders of silver.
For those who aren’t familiar, the silver to gold ratio is exactly as it sounds: the price of gold stated in ounces of silver.
Today the silver to gold ratio is trading at about 87:1. In simple terms, this means it takes 87 ounces of silver to buy one ounce of gold.
