The Gold Silver Ratio does it matter? There are many reasons to be optimistic if you are a precious metals investor in 2023. In 2022, global central banks jammed gold into their vaults in amounts not seen since the US dollar was pegged to the gold standard. The World Gold Council reported gold demand rose 28% as private citizens and investors scrambled to protect their assets from inflation. The year saw millions of retirees lose faith in the government’s ability to control inflation. The hardest hit were those who live on a fixed income and struggled to put food on the table and pay for their medications.
With the collapse of cryptocurrency darling FTX in November, investors worldwide lost billions as their money seemingly disappeared into thin air. The S&P 500 lost nearly 20% in 2022, while the DJI lost 4.17%. Gas prices were another area where consumers suffered, with many states seeing the price hovering near $5.00 per gallon or higher. 2022 will go down in history as the year we gave away hundreds of billions of taxpayer dollars without any recollection or idea exactly where it went.
The gold-to-silver ratio is an important indicator for prudent investors who don’t want to overpay when buying gold or silver bullion. The ratio is the amount of silver vs. the amount of gold per troy ounce. For example, The gold spot price today is $1,929.89 per ounce, while the silver spot price today is $23.70 per ounce. To figure the ratio, you would divide $1,929.89 by $23.70. This would give you a gold-to-silver ratio of 81.43. ($23.70 X 81.43 = $1,929.89)
Historically, the gold-to-silver ratio has always been approximately 18:1, or 18 ounces of silver would buy 1 ounce of gold. The US Geological Service estimates 18 times more silver in the earth’s upper crust than gold. This number however is arbitrary and is completely different in different parts of the world.
With history on our side and considering today’s ratio is roughly 80:1, we can confidently say there has never been a better time to buy silver bullion as we have seen in 30 years of trading silver bullion.