Thursday, September 13, 2018


It's no secret that precious metals have been in a bear market for around the last seven years. Lately silver has been taking a beating that in another age would have been associated with the parlor rug. Since peaking in 2011 at just a tick under $50.00 oz silver has been in a steady downward decline that has reached the point where the spot price closed today at $14.22 oz. Even more interesting is its relationship to gold. The silver/gold price ratio (the number of ounces of silver needed to equal 1 oz of gold) has fluctuated, at times dramatically, over the last 45 years or so since gold was demonetized. But the average has been in the range of 50:1 give or take.

Currently it is within spitting distance of 85:1.

No, that's not a record. See these historical charts from Kitco. But it is the highest it's been in a quarter century. And on the rare occasions when the ratio has gotten over 80:1 it has been a signal that silver, at least relative to gold, has become over sold and is cheap.


[Full disclaimer: I have recently added some silver to my precious metals holdings on a speculative basis. Nothing posted on this blog should be considered investing advice. The above is purely for informational purposes and readers should do their own due diligence before making any financial investments.]

1 comment:

Patrick Kelly said...

It is also good to compare the relative price of silver and gold to commonly used commodities.

A loaf of bread.
A gallon of gas.
A dozen eggs.
Box of xxx ammo.
Median home price in my neighborhood.

Last time I checked silver was in line historically with my personal examples (except house prices, that's gone crazy here), but gold was way over valued.

Of course this varies over time and with where you might live.