Gold to Silver ratio analysis: Mean reversion trade

Hany Saleeb Independent Analyst

Historically High Ratio, The Gold to Silver Ratio is currently at historically elevated levels (current data point at 83), meaning it takes 83 ounces of silver to buy one ounce of gold.

This suggests that, relative to gold, silver is undervalued when compared to its long-term average (which typically falls closer to 60-70).

If the ratio successfully reverts from 83 to a target of 70, this provides a clear upside scenario for silver.

That's why silver is very cheap compared to Gold.

Assuming a current gold price (e.g., $4,000) remains constant, the projected silver price would be calculated as 4000 / 70 57 $ per Silver ounce.

This illustrates the substantial upside potential for silver when the mean- reversion trade plays out.

Silver as a metal has two sources of demand, industrial source and monetary source as well.

Author

Hany Saleeb

Independent Analyst

Hany Saleeb is a highly experienced Senior Treasurer. With over a decade of experience in treasury, served as Head of Treasury at BM in France and head of research in Sinai Securities.

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