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The gold & silver ratio can be used as an indicator to look out for changes in the gold and silver markets. Investors often use this ratio to help them accumulate more gold or silver, selling one to buy the other. What is the Gold/Silver Ratio? The gold/silver ratio is simply the amount of silver it takes to purchase one ounce of gold. If the ratio is 50 to 1, that means, at the current price, you could use 50 ounces of silver to buy one ounce of gold. 50 to 1 is considered a low ratio. A high ratio indicates that silver’s value is up and a low ratio indicates that gold’s value is up. This ratio is an indicator that can be used to determine the right and wrong times to buy or sell gold and silver. What are the Benefits of the Gold/Silver Ratio? The benefits of the gold/silver ratio arise when there are fluctuations. Today, gold and silver trade mostly in sync with each other without a lot of shifts or variations. But when the ratio drops or rises to levels that are considered extreme, trading opportunities are created. If the gold/silver ratio rises to 100 then a consumer who owns one ounce of gold could sell it and buy 100 ounces of silver. When the ratio is high silver becomes more favorable because, relative to the ratio, silver is somewhat inexpensive. Watching the the gold to silver ratio is a good strategy to follow when trying to accumulate either gold or silver. |
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