Giles Coghlan LLB, Lth, MA
Financial Source
What is the gold/silver ratio
The gold/silver ratio measures the relative strength of gold versus silver prices. It shows how many ounces of silver it takes to purchase one ounce of gold.
To get this number, you divide the current gold price by the current silver price.
When you have done this you now have the gold/silver ratio. It is a simple way to see which of the two metals is gaining value relative to the other.
The meaning of the ratio
Whenever the gold/silver ratio rises, it means that gold has become more expensive compared to silver. The gold/silver ratio is at a twenty-year high after breaking out of the 94 level.
The ratio hits a 20-year high
Looking at the 20-year ratio you can see how much more expensive gold has become compared to silver. The Fed cut interest rates by 50bps yesterday, so the weak dollar should only cause prices to rise further. If you missed gold, silver is still hanging around the station.
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