Silver is currently greatly undervalued relative to its average long-term historical relationship with gold and, as such, 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.
By Lorimer Wilson (www.munKNEE.com) – “ The internet’s most unique site for financial articles! (Here’s why)”.
Gold to Silver Ratio
How both gold and silver perform, in and of themselves, does not tell the complete picture. More important is the price relationship – the correlation – of one to the other over time, the gold:silver ratio.
Let’s look at the gold:silver ratio from several different perspectives:
- Over the last 50 years, the average value of the gold-silver ratio was approximately 57:1.
- Over the last 25 years, the average value of the gold-silver ratio was 64:1.
- Over the last 10 years it was 66:1.
- Over the last 12 months, it was 80:1.
- since 1985 the mean ratio has been 45.7:1
Let’s now look at the various price levels for gold and the various gold:silver ratios mentioned above, one by one, and see what conclusions we can draw.
First let’s use the price of $1,400 for gold and apply the gold:silver ratios mentioned above in approximate terms and see what they do for the potential % increase in, and price of, silver.
- Gold @ $1,400 using the 57:1 ratio (50-yr. avg.) puts silver at $24.56
- Gold @ $1,400 using the 66:1 ratio (10-yr. avg.) puts silver at $21.21
Now let’s apply the projected potential parabolic peaks of $2,000, $3,000, $5,000 and $10,000 to the various gold:silver ratios and see what they suggest is the parabolic top for silver.
Silver’s Potential Price Range With Gold At $2,000
- Gold @ $2,000 using the ratio of 57:1 puts silver at $35.09
- Gold @ $2,000 using the ratio of 66:1 puts silver at $30.30
Silver’s Potential Price Range With Gold At $3,000
- Gold @ $3,000 using the ratio of 57:1 puts silver at $52.63
- Gold @ $3,000 using the ratio of 66:1 puts silver at $45.45
Silver’s Potential Price Range With Gold at $5,000
- Gold @ $5,000 using the gold:silver ratio of 57.1 puts silver at $87.72
- Gold @ $5,000 using the ratio of 66:1 puts silver at $75.76
Silver’s Potential Price Range With Gold at $10,000
- Gold @ $10,000 using the gold:silver ratio of 57:1 puts silver at $175.44
- Gold @ $10,000 using the ratio of 66:1 puts silver at $151.52
It would appear that, any way we look at it, physical silver is currently undervalued compared to gold bullion and is in position to generate substantially greater returns than investing in gold bullion.
Gold to Silver Ratio Conclusion
History will look back at the recent artificially high gold:silver ratio as an anomaly caused by the world being deceived into believing that fiat currencies are real money, when in fact they are all an illusion.
This fiat currency experiment will end badly in a currency crisis and when that happens, as it surely will, gold will go parabolic and silver along with it – but even more so – as the gold:silver ratio adjusts itself to more historical correlations.
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