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Gold Silver Ratio | Is Silver a Good Long-Term Investment?

Gold Silver Ratio | Is Silver a Good Long-Term Investment?

June 09, 2024731 view(s)

The monetary metals continued to rally over the last week, with gold up a fraction to $2,401, silver up another 6% to $31.54, platinum down 2% to $1,054, and palladium down 1% to $1,045.

 

 

From a year ago today, gold is up 22%, silver is up 33%, platinum is down 2%, and palladium is down 30%.  YTD, gold is up 16%, silver is up 32%, platinum is up 5%, and palladium is down 8%.

 

Today we will discuss what is called the “Gold/Silver Ratio” (G/S ratio).  The G/S ratio is a measurement of how many ounces of silver it takes to purchase an ounce of gold, at any given time.  The higher the G/S ratio is, the more advantageous it is to purchase silver, over gold.

 

The G/S ratio has historically been in a range from a low of 14.01 (in 1975), to a high of 125.89 (March 17, 2020).  If you bought silver when the G/S ratio was 14.01, you’d have been better off to have purchased gold - which has outperformed silver since then.

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On 3/17/20, gold was $1,524/ounce and silver was $12.47/ounce; it took 125.89 ounces of silver to equal an ounce of gold.  Silver purchased then is up 153%, in 4.2 years.  Gold purchased then is only up 58% in 4.2 years.

 

Today, the G/S ratio is 77.  Looking back 50 years, we can see that the G/S ratio continues to favor the purchase of silver over gold.

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