Gold And Silver Ratio

Summary: The gold:silver ratio currently stands at around 60:1 – meaning, it takes 60 ounces of silver to buy 1 ounce of gold. Many though believe it should be at around 16:1, which was the average ratio prior to 1900. Since, the ratio has been quite volatile and has been as high as 100 and as low as 16-17. At gold and silver’s peak in 1980, the ratio stood at 16:1. Where the ratio should be is subject of intense debate. A ratio of 16:1 would put the silver price at $90. Others feel it should reflect the metals’ abundance – silver is 19 times more abundant than gold. A 19:1 ratio translates into a silver price of $75. Other studies show that silver in the ground is estimated at 9-ounces of silver for every 1-ounce of gold. A 9:1 ratio would translate into a silver price of $155. Continued easy money policies are considered “bullish” for both gold and silver in the long-term. Citibank projects gold could hit $3500 over the next few years. This is extremely bullish for silver. If they were to revert to the long-term ratio of 16:1, silver could conceivably hit $220. That’s certainly a far cry from today’s $20-$22 price level. Read more…