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What is the Gold Silver Ratio?
The gold-silver ratio represents the number of silver ounces it takes to buy a single ounce of gold.
Throughout the ages the ratio has varied dramatically. During the 19th century it averaged 15, in the twentieth century it's averaged around 50. In recent times it hit it's peak of 100:1 in 1991 and it's low of 17:1 in 1980. When discussing GSR the £ price of the metals is irrelevant
Why should I care?
There are two main reasons why you may wish to be aware of the GSR.
1. Choosing which metal to purchase. If the GSR is high you may wish to buy more Silver as Gold is considered "expensive" compared to Silver. When the GSR is low the opposite is true. Remember the actual price of the metal is not important.
2. Aquiring free Oz of precious metal (getting something for nothing) When GSR is high you could trade all your Gold for silver , when GSR drops you trade your silver back into gold. By doing this you get free Precious metals, sounds too good to be true? well you maybe right.
a. The premiums on silver are generally higher than the premiums of gold and silver is subject to VAT in the UK, making the true GSR for trading physical metals a lot smaller than you initially would think.
b. Without hindsight or a crystalball no one knows the true highs and lows until after the fact.
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