Silver Is Inexpensive Says The Gold To Silver Ratio [iShares Silver Trust (ETF), SPDR Gold Trust (ETF)]

gold and silverGary Christenson: The gold to silver ratio tracks the degree to which silver is expensive or inexpensive compared to gold.  Since silver prices move too far and too fast compared to gold prices, the ratio drops in silver bull markets and increases as silver corrects lower.

This graph shows the ratio over the past 27 years.  Note the recent high in the ratio after silver and gold were “bombed” in 2008, and the recent low in the ratio when silver peaked in August of 2011.

Gold to Silver ratio 1987 2014 price

gold to silver ratio from 1987 till 2014

After the silver price peak in 2011 it fell to a low in June 2013 and a double bottom low in December 2013.  The ratio is currently about 66 – at the high end of the 27 year trend.

What this proves:  Nothing.

What it strongly suggests: 

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