Gold continues to reign supreme. Over the past 12 months, the gold price has risen from roughly 1’300 US$/oz to currently (as we wrote this on March 2nd, 2020) about 1’600 US$/oz. That represents a gain of 23%! Meanwhile, during the same period, silver rose only by about from 11%. So, don’t invest in silver, right? Wrong!
As we write this article, the silver price stands at 16.72 US$/oz, while one troy ounce of gold costs just about US$/oz 1600. Thus, the gold-silver ratio stands at a bit over 95. In other words, with the current value of one ounce of gold you could buy roughly 95 ounces of silver.
Clearly, as depicted in the chart below, the silver price has been lagging increasingly over the past two years in its reentry to the next upward cycle. This might be attributable to silver’s more industrial nature, compared to gold, or vice versa, to gold’s continued safe haven perception amongst global investors.
Whatever the reason, silver and gold have historically tended to correlate strongly. There’s no reason to believe this will change in the future.
Gold price compared to silver price, 1994 - 2020
As depicted in the long-term chart below, over the past 50 years, the gold-silver ratio has never been higher. Historically, the ratio has tended to average around 60. With the current possible overshoot of gold in response to sliding stock markets and the coronavirus, if you have considered buying silver, NOW is the right time to do it!
Source: Global Gold, Bloomberg Data
This is a historic high, and it is reasonable to expect a mean reversion in the near future. Depending on your situation and objectives, this affords a unique investment opportunity. Contact our team at Global Gold, if you’d like to learn more about buying and storing silver with us.
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