Sunday, September 16, 2018

Gold-Silver Ratio highest in 27 years

The Gold-Silver Ratio has been thought of as a reliable technical ‘buy’ indicator for silver, whenever the ratio climbs above 80. The ratio represents the number of silver ounces it takes to buy a single ounce of gold. The gold-to-silver ratio has moved above 85. One needs to go back to 1991 for the last time it was higher than it is now.

In ancient times, the ratio was set at 12 to 1. In 1792, the ratio was fixed by law in the US at 15:1. The current ratio is high historically, 60% above the 20-year average.
Conventional wisdom suggests silver is undervalued relative to gold. The all time high for the gold-to-silver ratio occurred in February 1991, at the height of an economic recession. The current gold-to-silver spike is happening absent any major crisis, and as major stock indices hit new all-time highs. Experts are suggesting we may be approaching a correction in the US stock markets.