As many know, the gold/silver ratio (the price of gold divided by the price of silver) has risen 80 times over the past 25 years. And it didn’t stay there for long. History shows that this is the level where silver is worthless compared to gold. Sooner or later this ratio will drop to match the large difference between the prices of gold and silver. Silver outperforms gold when the ratio falls. Some of the gains are huge – some reaching triple digits in a few seasons. In recent history, the ratio has hovered around 70 to climb higher. This pattern is similar to what happened in 1996. And despite the devastating bear market in precious metals during that time, silver saw some gains. Throughout history, however, the gold/silver ratio has never stayed above 80 for long.
This is important to anyone who wants to buy silver bars because it means that the historical window for buying silver at a lower price compared to gold is very small.
Under normal circumstances, gold and silver tend to get bids for safe buying, rising inflation and low interest rates. Currently, tensions are growing with Russia and China, which threaten Taiwan. Another thing to look at is inflation. We should continue to see higher inflation as we seem to be moving from one crisis to another. Silver investors should also keep an eye on interest rates and how they react to potential turbulence.
When it comes to buying groceries, sometimes you just want to know how much something weighs. Sure, you could look up the weight of an item in your food’s packaging, but how easy is it to figure out how many ounces in a gallon? This blog article provides you with the answer.
Like a rubber band stretched too far, we will eventually see a return. If the ratio expands beyond 80, it is likely to change the position of the market and a major correction will occur. There are many different types of fundamental and technical standards that technicians focus on and many ways to interpret them. This is why technical market analysis is an art.
So what can bring silver back and lower this ratio?
Industrial demand accounts for more than 50% of total silver demand and ahead of demand for laptops, solar panels, cars and smartphones means silver demand is likely to continue to grow. This brings up the issue of supply. Currently, silver is weighed down by wars, trade deals and much more. At the moment people are looking at the US, the Fed should hold and hold interest rates, demand should increase and rates should come down. This combination of rising geopolitical concerns may be what reignites the silver bull market.
History has shown that the price of silver has made nice gains when the gold/silver ratio has reversed. Whenever it reaches its current level, it won’t stay there for long.
The bottom line is simple: Buy silver bars now because the ratio says it’s unlikely to stay at these prices for long. The key is to find a reputable dealer who will do more than just try to sell you their products but also be a good source of information. You should be confident that you are using the right dealer but the only way to know for sure is to try a couple of dealers in your area.