120 ounces and counting!
On March 18, the gold to silver ratio reached the all-time high of 124:1.
On that day, we needed 124 ounces of silver to purchase 1 ounce of gold.
As we can see in the chart below, in 2019, the ratio fluctuated between 80:1 and 90:1 before shooting up in March 2020.
If we looked further back in time, we would see that before 2000 the average ratio was 47:1. And from 2000 to 2018, it fluctuated between 50:1 and 70:1.
So from a historical standpoint, the current ratio looks like an isolated event.
Even more so knowing that, in the Earth's crust, the gold to silver ratio is estimated at 18:1.
And what does that tell us? One of two things:
That gold is overvalued compared to silver and therefore more likely to trade down.
OR
That silver is undervalued compared to gold and therefore more likely to trade up.
Whatever the answer, this is a chart every precious metals buyer needs to watch closely.
Photo credit: Travel Photographer
