Are Silver Prices Lagging Gold, Or is Gold Just Way Over Priced?
One of the reasons silver prices are expected to rise dramatically is because of the historical ratio between gold and silver prices; the historical ratio is 20 to 1 (20:1). Gold has taken off in price rising from just over $200 per ounce in 2001 to over $1,240 per ounce in August 2010, but even though silver is rising in price, it is still only approximately $18 per ounce. Based on the 20:1 historical ratio, silver prices should be $62 per ounce right now. But what if this discrepancy is not that silver prices are lagging behind gold prices, but rather, gold is simply way over-priced? After all, the fair market price of gold should be only around $600 per ounce based on the growth of the Consumer Price Index (CPI). Gold prices are currently high (and rising), because of low interest rates, high economic uncertainty around the world, and expected rising inflation. If all the “bad” economic factors went away, would gold prices fall revealing that silver is in fact fairly valued? The ans
