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Silver to Gold Ratio

Gary Christenson
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Thursday, March 8th

Silver prices move farther and faster than gold prices, both up and down. When long term rallies begin silver often lags gold as in early 2018. The current gold to silver ratio at eighty to one is high. Fifty-nine to one has been the average for 40 years. Prior to 1913 the average was about 15 to one.

An eighty to one gold to silver ratio shows prices for gold and silver are too low. At silver price peaks the ratio will drop to thirty or even fifteen to one.

The silver to gold ratio (inverse of the gold to silver ratio) is a good indicator of silver price lows. Examine the following graph. The ratio sits at a long-term low in early 2018. The four other ratio lows in the past 30 years have been good times to buy silver.

Silver prices bottomed in late 2015 and have built a base since then. A reverse “head-and-shoulders” pattern indicates a long-term bottom.

CONCLUSIONS:

Dollars are devalued every year. The late 2015 low in devalued dollars is similar to the multi-decade low at $4.01 in 2001.

Silver prices are low in nominal terms and compared to gold. Silver prices are over four times higher than their long-term 2001 low at $4.01 and the ratio low in May 2003, but so are national debt, the DOW, NASDAQ and many consumer prices.

Debt based fiat currencies are printed in excess. Prices for silver, gold, the DOW, food, and gasoline rise when measured in devalued currency units.

National debt doubles every eight to nine years. President Trump likes lower taxes, higher debt, more wars and a weaker dollar. Debt will accelerate higher and prices for silver, gold, food and energy will rise much higher as the dollar is devalued.

Silver is undervalued. Buy low and sell high suggests that a purchase of silver from Miles Franklin or Why Not Gold is sensible.

Gary Christenson

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