Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are encouraged to conduct their own research and seek professional guidance before making any investment decisions.

By Doug Young – 06 April 2024

gold silver ratio

Introduction

The gold and silver markets have been experiencing rapid gains, leaving investors curious about which metal will emerge as the winner in terms of percentage gains for 2024.

Experts suggest that the key to understanding this race lies in the gold-silver ratio. This ratio, which measures the number of ounces of silver needed to equal the value of one ounce of gold, is currently soaring.

Here, we delve into the recent performance of gold and silver, explore factors contributing to silver’s potential rise, and highlight expert opinions on the ratio’s implications for investors.

Gold and Silver’s March Performance

March proved to be a remarkable month for both gold and silver, with both precious metals experiencing significant price increases.

Gold surged by roughly 10%, surpassing the $2000 per ounce mark. Simultaneously, silver kept pace, registering a 10% increase over the same period. These gains have captured the attention of investors worldwide, prompting a closer look at the underlying factors driving this growth.

Optimism Surrounding Gold and Silver

Several reasons contribute to the current optimism surrounding gold and, in particular, silver.

Expectations of upcoming rate cuts and the anticipation of increased demand in the industrial sector have instilled confidence among market observers.

Silver, known as the best conductor of electricity, derives nearly half of its demand from industrial applications. The Silver Institute forecasts a surge in industrial demand this year, projecting global silver demand to reach 1.2 billion ounces in 2024, the second-highest level on record.

These developments indicate the potential for substantial upward pressure on silver prices.

The Gold-Silver Ratio

The gold-silver ratio, a key indicator for precious metal investors, serves as a yardstick for valuing silver against gold.

Historically, the ratio has averaged around 60:1 during the current millennium. The ratio currently hovers around 90:1 however, significantly above its long-term average. This discrepancy suggests that silver might be acutely undervalued compared to gold, creating a potential buying opportunity for investors.

Expert Opinions and Projections

Experts in the field have expressed their views on the gold-silver ratio and its implications for silver’s future performance.

Nicky Shiels, head of metal strategy at MKS PAMP, a global metals trading company, in a Metals Forecasts for 2024 notes that with expected easier G10 monetary policy and a higher tolerance for inflation, high beta cyclical commodities like silver should outperform, leading to a decrease in the ratio.

This sentiment is echoed by JP Morgan, which projects gold prices to reach as high as $2500 per ounce and suggests that silver could touch $30 per ounce by the end of the year.

Joni Teves, a precious metal strategist at UBS, believes that silver is poised to “really, really shine” this year, envisioning a potentially dramatic move.

Similarly, John LaForge, head of real assets at Wells Fargo, asserts that silver will soon become the asset to own.

Investment Opportunities

The historical trend of silver outperforming gold during periods of high gold-silver ratios presents a compelling investment opportunity. Experienced gold and silver buyers are aware of the potential gains that can be achieved when the ratio reaches elevated levels.

For those new to investing in precious metals, the current ratio indicates an exciting time to enter the market. With the projections and expert opinions supporting silver’s potential rise, there is a sense of anticipation among investors as they eagerly await the end-of-year outcome.

Conclusion

As gold and silver continue their upward trajectory, the gold-silver ratio has soared to 90:1 in comparison to its average during the current millennium of 60:1, indicating that silver may be undervalued compared to gold.

Experts foresee silver outperforming gold in the near future, with projections of significant price increases. The potential surge in industrial demand coupled with the historical trend of silver’s performance during high ratio periods further reinforces the investment opportunity.

Whether you are an experienced investor or new to the precious metals market, the current landscape suggests that silver is poised for a remarkable journey. Keep a close eye on silver as it may shine brightly in the coming months.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as financial advice. Readers are encouraged to conduct their own research and seek professional guidance before making any investment decisions.

Inflation Eating Your 401(k)?

inflation Order this free gold IRA company checklist so you can work with the best. Learn what Joe Montana did for his IRA/401(k)
get your free guide