Key Indicator Points to Opportunity

September 04, 2017

A very important indicator is wildly off balance right now, which means a massive investment opportunity for those paying attention. What is this indicator?

The gold-silver ratio

In the simplest of terms, the gold-silver ratio is calculated by determining how many ounces of silver it takes to purchase one ounce of gold. For example, if the price of one ounce of gold is $1300 and silver is trading at $20 per ounce, then the ratio is 65:1 ($1300 divided by $20). Why is this ratio important?

Why Investors Monitor the Gold-Silver Ratio

Many precious metal enthusiasts keep an eye on the gold-silver ratio because when the number is extended above or below the average, it’s potentially an opportunity to purchase or sell, based on historical data with the assumption that prices will move back to their mean. So, a really high ratio would potentially indicate that silver is undervalued and an attractive buy. Conversely, when the number is well below its average, gold could be a better buy, or so the argument goes.

When reviewing historical data, it’s important to understand the time frame under consideration. There are huge swings in the ratio depending on what century or timeframe you’re referencing. In the 1800’s, the ratio averaged around 16. You frequently see this numbers referenced in articles by gold bugs. At that time, the United States was on a bimetallist currency system that fixed the ratio as part of monetary policy. The discovery of the Comstock Lode and other important silver discoveries and bonanzas out west put immense pressure on the fixed ratio with silver becoming more and more abundant. The eventual abandonment of the gold standard allowed the prices of these two metals to float against each other, giving us potentially useful signals about valuation and relative supply and demand.

During the last 25 years or so, the number has averaged at around 66.

Right now the gold-silver ratio is heading towards 80!!!

80 is a critically important level for this indicator. In recent history, once it tops out here, something predictable happens that YOU need to know about. In fact, one of the smartest men in precious metals has good reasons (think: natural LAW) to believe that the ratio should only be 9!!!!!

If he’s right, SILVER should eventually yield an 800% return!!! Don’t you want to know his reasoning? Even if he’s only a little bit right, you’d still be crushing the market.



Click here to read what Keith Neumeyer is saying about silver investment and the gold-silver ratio.

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