What is the gold/silver ratio and why is it important?
A. The gold/silver ratio is the ratio of the gold spot price to the silver spot price. It represents the number of ounces of silver that trade for an ounce of gold. For instance, when the gold spot rate is $1100 and the silver spot rate is $17.00, the gold/silver ratio is $1100/$17 or 64.7. Historically, up until the early 20th century, the gold/silver ratio stayed consistently below 16, with 16 ounces of silver trading for one ounce of gold. Since the early 20th Century, the gold/silver ratio has risen as high as 100, and fluctuates up and down. This fluctuation in the gold/silver ratio offers an opportunity to increase the number of ounces of metal you own by swapping gold for silver when the ratio is high and silver for gold when the ratio is low.
