Last week, I alerted you to the fact that the gold to silver ratio (the price of gold divided by the price of silver) surpassed 80. This has happened only a few times in the last 25 years, and each of those times we have seen that the ratio has never stayed at those high levels long. History, our best gauge for what is to come, shows us that sooner or later the ratio falls to account for the large discrepancy between the gold and silver prices. You can read more in our most recent article, “Is This a Good Time to Buy Silver?” But I will spare you some of the suspense now – the short answer to that question is, “YES!”
Jeff Clark, Senior Precious Metals Analyst for, used this chart to illustrate the gold to silver ratio since 1995, along with silver’s gains after the ratio fell from 80. He also sourced The London Bullion Market Association in reference to this chart.
You can see that the max ratio since 1995 was about 84. The chart also shows that the ratio has only reached those levels five times since 1995. Finally, note the correction that happens after it does reach those levels. I point this out because as a precious metal investor, this is signaling a huge buying opportunity for silver. When the gold to silver ratio reaches these levels, I know that I should buy all that I can afford to take advantage of the numbers. I have even had some clients trade in some of their gold to better position themselves into silver because of these numbers. In fact, I have also done the same.
Clark also used this chart in his article, “History Says You Have 27 Days to Buy Silver Before It Rises,” to show the amount of days the ratio stayed in the 80s. He used this chart to validate the title of his article by averaging the days listed below in red and subtracting the days the ratio has been above 80 now, which is 20 days. He suggested that history is telling us that based on the average since 1995, there may only be 27 days left to buy silver before the ratio turns in a more normal direction.
I am a firm believer that to look to the future we need to first understand our past, because history teaches us from our forefathers’ successes and mistakes. While we can’t be sure how many days the ratio will stay at this level, we can be sure that it will turn to more normal levels. Rather than relying on Clark’s average-based 27 days, I would encourage you to take advantage of this opportunity as fast as you can with as much as you can. I made yet another large silver purchase this week and have been telling my close friends and family to do the same.
History doesn’t lie and neither do the numbers. Please contact my team today if you need help in bettering your position in precious metals, whether that is a new purchase or re-positioning the metal that you already have.