![]() In 1991 silver was trading at extremely low prices- causing a peak in the gold-silver ratio, denoted by the blue circle in the graph above. The graph above shows the gold to silver ratio for the past several decades. When the silverprice decreases faster than the goldprice the ratio will increase.When the goldprice decreases faster than the silver pricethe ratio will decrease.When the silverprice increases faster than the goldprice the ratio will decrease.When the goldprice increases faster than the silverprice the ratio will increase.Get My Guide HOW THE GOLD-SILVER RATIO WORKS ![]() The ratio peaked at 100 in 1991 when silver prices dropped to extreme lows.The cause of this relationship is due to gold generally outperforming silver during recessions, leading to increases in the ratio. The ratio tends to increase during times of economic distress.With highs breaching 80 (ounces of silver to one ounce of gold) and lows sinking to around 40. The gold to silver ratio has averaged around 60 from 2001 to 2017.For example, when gold price is trading at $1000 per ounce and silver price is trading at $16.67 per ounce the gold-silver ratio will be equivalent to 60. It is the number of silver ounces you would need to trade to receive one ounce of gold at current market prices. Therefore, knowing how to trade the gold- silver ratio can be a huge advantage to maximize your commodities trading strategy. Traders look to the ratio for an edge in identifying buy and sell signals in the market. The gold- silver ratio offers invaluable insight into the possible movements of the two precious metals relative to each other.
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