The Silver-Gold Ratio: Significance For Investing

The historic, or true ratio of 16:1, also noted as 16, meaning that 16 ounces of silver would buy one ounce of gold is discussed. This ratio was originally created based on the supply of silver and gold from the earth. However, this is not to be confused as the current trading ratio, which is merely a representation of current trading prices, which in itself is often a definition of the undervalued metal.

During the most recent recession, the gold silver ratio hit 84.4, its highest level in four years. Currently the ratio is around 50, this signifies an extremely overvalued gold to silver ratio which represents a definite time for investors to buy silver bullion.