The gold/silver ratio (the price of gold divided by the price of silver) has touched 80 a few times over the past 25 years but the number of days one has been able to buy silver while the ratio is above 80 has been few and this is calendar days, not trading days. This is highly actionable information. Here's an updated view of the gold/silver ratio since 1995, along with silver's gains after the ratio reversed from 80.
 You can see how much silver has outperformed gold when the ratio falls and that some of those gains have been big?two of them were measured in triple digits. You can also see that after dipping below 70 a couple times over the past two years, the ratio has returned to the 80 level (80.4 as of March 5). This pattern is similar to what it did in 1996, and, in spite of a ravaging bear market in precious metals at that time, silver gained 36% over the next 14 months. Something else sticks out in the chart: The gold/silver ratio has never remained above 80 for very long. This is significant if you're a buyer because it means that the historical window to purchase silver at an undervalued price compared to gold has been small. Here's the same chart with the number of days the ratio stayed above 80 before reversing. 
You can see that the number of days one has been able to buy silver while the ratio is above 80 has been few and this is calendar days, not trading days. This is highly actionable information. Since 1995, you can see there have been three occasions where the ratio registered at or above 80. The average of those days is 47. As of March 5, the ratio has been at or above 80 a total of 20 calendar days?so if it met the historical average this time around, you'd have 27 calendar days left to buy before the ratio drops. In other words, you'd have until April 1 to buy silver before the price potentially moves higher (the ratio could also move lower if silver fell less than gold, but the price is already low). The ratio could drop sooner or later than 27 days, of course. The point to this exercise is that the ratio has historically remained above 80 for only short periods of time. Thus, the opportunity to buy silver while it's cheap is likely going to be brief…and history shows the silver price has logged some very nice gains when the gold/silver ratio reverses. The conclusion is simple: Buy silver now, because the ratio says it is unlikely to remain at these prices for long. Scroll to very bottom of page & add your comments on this article. We want to share what you have to say! Related Articles From the munKNEE Vault: 1. Could Gold:Silver Ratio Be Sending A Bullish Message? Could the long-term trend in metals be about to change? 2. Gold:Silver Ratio Suggests Much Higher Future Price for Silver ? MUCH Higher! The majority of analysts maintain that gold will reach a parabolic peak price somewhere in excess of $5,000 per troy ounce in the next few years. Given the fact that the historical movement of silver is 90 ? 95% correlated with that of gold suggests that a much higher price for silver can also be anticipated. Couple that with the fact that silver is currently greatly undervalued relative to its average long-term historical relationship with gold and it is realistic to expect that silver will eventually escalate dramatically in price. How much? This article applies the historical gold:silver ratios to come up with a range of prices based on specific price levels for gold being reached. 3. What Should the New Normal Be For the Gold:Silver Ratio? Why do some analysts argue that the gold:silver ratio should reflect the relative rarities of the two metals in the ground and therefore be 10:1 or lower? I don't know, but it isn't a valid argument. Neither is the argument that the gold:silver ratio should be around 16:1 because that's what it averaged for hundreds of years prior to the last hundred years. So, what should it be? 4. The Gold to Silver Ratio: What It Is & How To Use It To Your Financial Benefit There is an underlying belief by many that there is a balancing ratio between silver and gold that can, over the long-term, help in evaluating current market prices. Swings and trends in this ratio are one of the many indicators gold buyers and investors use to evaluate their market positions and the right time to buy or to sell. 5. Apply Gold:Silver Ratio Ups & Downs to Greatly Increase Your PM Holdings ? Here's How Should you buy & hold your gold or silver or switch back and forth depending on the gold/silver ratio? This article examines 3 scenarios and identifies certain rules that should be followed to make the most of the ups and downs of the gold/silver ratio to substantially increase your holdings over time. For all the latest ? and best ? financial articles sign up (in the top right corner) for your free bi-weekly Market Intelligence Report newsletter (see sample here) or visit our Facebook page. The post Gold/Silver Ratio Suggests You Have Until April 1 To Buy Silver While It's Still Cheap - Here's Why appeared first on munKNEE dot.com. |
