What is the Gold-to-Silver Ratio and What does it Mean?
The gold-to-silver ratio is the ratio of the price of gold to the price of silver. It represents how many ounces of silver it takes to buy one ounce of gold at a given point in time. For example, if the gold-to-silver ratio is 70, it means that it takes 70 ounces of silver to buy one ounce of gold.
The gold-to-silver ratio is closely watched by investors in precious metals because it can provide insights into the relative values of gold and silver. Historically, the ratio has varied widely, with some periods where the ratio was as low as 15 or 20, and other periods where it was as high as 100 or more.
A high gold-to-silver ratio can suggest that silver is undervalued relative to gold, while a low ratio can suggest that gold is undervalued relative to silver. Some investors use the ratio to make investment decisions, such as buying silver when the ratio is high and selling silver when the ratio is low, in the hopes of profiting from changes in the relative values of the two metals.