Understanding the Gold-Silver Ratio: What It Means for Investors

The gold-silver ratio is one of the oldest metrics used by precious metals investors. It simply represents how many ounces of silver it takes to purchase one ounce of gold. Understanding this ratio can help investors make more informed decisions about their precious metals allocations.

Historically, the ratio has averaged around 60:1, meaning 60 ounces of silver equals the value of one ounce of gold. However, this ratio has fluctuated significantly over time, ranging from as low as 15:1 to over 100:1.

When the ratio is high (silver is cheap relative to gold), some investors favor silver, expecting the ratio to contract. Conversely, when the ratio is low, gold may offer better relative value.