The Gold/Silver Price Ratio

There is no doubt that gold and silver prices have been sensationally volatile in terms of paper currencies, especially as you compare their values over a long period. Just fifty years ago, thirty-five U. S. dollars were exchanged for one troy ounce of gold. These days, you need somewhere about 1,700 to 1,900 dollars for an ounce. In other words, a dollar buys just 2% of the gold it once did five decades ago.

Silver, like gold, is a universally accepted tangible precious commodity and store of wealth. It’s value has tracked gold's value, for the most part, and not the value of a paper currency. Five decades ago, 1.8 U. S. dollars were exchanged for one troy ounce of sliver and now you need about 18-25 dollars for an ounce.

One can point to a longstanding value of gold as being about 15 times that of silver since ancient times, but that is, shall we say, ancient history. In recent history, gold has been valued at an average of about 60 times silver, where silver outperforms gold in times of metals-favored trends. In 2011, in the bullish market after the financial crisis, gold's comparative value fell to below 35 times silver. In other words, silver outperformed gold at that time.

In unfavored bullion market trends, silver has been generally neglected and has become relatively cheap compared to gold. The market statistical term used to view silver in terms of gold is the gold/silver ratio. The higher the ratio the more expensive gold looks, and the more attractive silver looks. Since 2011, silver has become relatively undervalued in terms of gold.

Gold and Silver Ratio

Of course, past history

Is not a predictor of future events. However, monetary economic theory advises that if a government creates additional trillions of dollars out of thin air as stimulus, it is entirely unlikely that a dollar would buy the same amount of a precious commodity like gold.

For investors that believe paper currencies will not increase in their purchasing power of gold, and also think that market statistics like the gold/silver ratio may tend to revert to their mean, one can calculate a suggested value for silver based on a price of gold.

For example, a gold level of $1,700 and a gold/silver ratio of 80 to 60 would suggest silver being valued at $28 to $21 per ounce. And of course, a high gold/silver ratio of 120 to 80 suggests $14 to $21.

Why Silver Bullion Depository Storage

Anyone who has earned income, or is the spouse of a wage earner, is eligible to open a precious metals IRA, and there is no limit to how many IRA accounts an individual may have. The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. However, there is no maximum dollar amount on transfers or rollovers from an existing IRA account to a precious metals IRA account. Consult with a tax specialist for specific IRS rules and IRA investment advice.