MIKE MAHARREY: Gold-Silver Ratio Over 103 Indicates Silver Is Still on Sale!
As gold marches ever higher, silver continues to lag, like a kid more interested in sniffing flowers than keeping up with his parents’ pace.
Don’t get me wrong. Silver hasn’t done horribly so far this year. It is up a little over 12 percent. However, it has failed to close the gap with gold, and that has many investors questioning what’s going on with the white metal.
As of this morning, the gold-silver ratio was just over 103:1. That means it takes about 103 ounces of silver to buy an ounce of gold.
This is slightly above the 1991 peak and not too far below the all-time high of 123:1 during the pandemic chaos in 2020.
In other words, this is an extremely wide spread from a historical perspective and indicates that silver remains drastically underpriced compared to gold.
More significantly, these extremely wide gold-silver ratios don’t tend to last long. They eventually snap back to the mean. And when that happens, it’s generally a very fast move.
Historical Gold-Silver Ratio Perspective
Mining industry geologists estimate there are somewhere between 19 and 20 ounces of silver for every ounce of gold in the earth. This provides a natural starting point for a gold-silver ratio of 20:1.
From a mining perspective, annual silver production averages around 800 million ounces per year, and gold production is a little over 100 million ounces. (These are rounded numbers.) That would give a gold-silver ratio of around 8:1.
Analyst Lau Vegys included a chart in a recent article published on Doug Casey’s Crisis Investing website that provides some perspective on the gold-silver ratio. As he noted, “While I don't have precise data going back centuries, I recently stumbled upon a graphic circulating on X that really drives home just how unusual today’s silver (under)valuation is. Although I haven't verified every data point myself, it broadly aligns with historical accounts.”
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