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Thursday
May132010

Gold vs. Silver

While the price of gold rising to records has gotten most of the headlines, some traders are saying that investors should look to silver which they say is a good under the radar play on the investor flight from fiat currencies.  The chart below shows the historical ratio between the price of gold and silver since 2000.  When the line is rising gold is outperforming silver and vice versa when the line is declining.  Over the last decade, the ratio bottomed out at around 46 and peaked out at around 82 in late 2008.  The average ratio over the entire period has been 61.6.  Interestingly, the current ratio of 63.3 is only slightly above average and right at the midpoint of the high and low points of the last ten years.  So even though silver hasn't been getting the headlines, the historical ratio between its price and gold is pretty much right inline with the historical average.

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Reader Comments (3)

calculating over 10 years. You can also do that over one month or a day.
Beter is to take a few hundred years. Then we come to 1:12.
I think your calculation sucks !

May 16, 2010 | Unregistered Commenterfrank

Agreed Frank! They can't call 61.6 an "historical average". To me, this historically high ratio says that silver is a HUGE investment opportunity because it will eventually normalize. Probably not to 1:12, given its current industrial and biomed usage, but still a great deal of upside potential. With rumors of price manipulation of silver by JPMorgan et al, I suspect this ratio to gold will normalize sooner rather than later. I'm all in!

May 17, 2010 | Unregistered CommenterCody


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August 19, 2010 | Unregistered CommenterMarrilyn

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