Is the gold and silver ratio shrinking or growing?

Is the gold and silver ratio shrinking or growing?

The gold and silver ratio as of April 21, 2015 is 74. This means that, based on the U.S. dollar, it would take 74 ounces of silver (currently $16.07 per ounce) to equal one ounce of gold (currently $1,201 per ounce). The gold silver ratio hit a historical low of 14 in December 1979, and its record-high of 98.8 was achieved in February 1991. The average gold/silver ratio over the previous 10 years is as follows:

2005 – 60
2006 – 57
2007 – 65
2008 – 61
2009 – 51
2010 – 45
2011 – 51
2012 – 61
2013 – 70
2014 – 75

The gold/silver ratio has climbed each year since 2010, but will this trend continue? Many gold and silver industry experts believe the ratio will shrink in the coming years because of the following three reasons:

1. At least 55% of the silver that gets used for industrial purposes (computers, cell phones, home appliances, medical devices, automobiles, etc.) is not reused, while gold is often recycled and repurposed.

2. Many people want to buy precious metals to protect their spending power from inflation, but cannot afford gold. Thus, they buy silver bars and coins.

3. Some people believe that gold and silver will be the main form of currency in the future. If that’s true, then we’d need to use silver, instead of gold, to buy gas, groceries and other relatively inexpensive items.

If the gold spot price didn’t move from its current level, and the gold/silver ratio readjusted to 47 (the historical average during the 20th century), then the silver spot price would increase to about $25 per ounce – a 50% increase from today’s prices. No one can promise you that the gold and silver ratio will fall because of the three reasons mentioned above, but many investors believe buying silver as well as gold could pay off in the long run.

For more information about gold and silver investing, call at (800) 394-3337 today or click below for your free gold and silver investing guide.

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