MARKET NOTES · 4 MIN READ
What the gold-to-silver ratio actually tells you.
A useful comparison, with important limits. Here’s how to read it.
A simple division
Divide the gold price by the silver price using the same currency, weight unit and observation time. With hypothetical prices of $2,000 and $25 per troy ounce, the ratio is 80. One ounce of gold then has the same spot value as 80 ounces of silver.
Relative value is not a forecast
A higher ratio means gold is more expensive relative to silver at those quoted prices. It does not prove silver is undervalued or guarantee the ratio will return to a previous level.
Physical trades have costs
Switching physical holdings may involve dealer spreads, shipping, storage and taxes. Those costs are not reflected in the spot ratio. Calculate the actual trade before drawing conclusions.
Keep the context
Compare consistent data over time and use the ratio as one descriptive measure. A historical chart cannot tell you what either metal will do next.