The gold silver ratio calculator shows how many ounces of silver are needed to buy one ounce of gold. When the ratio is high, silver is relatively cheap compared to historical norms. When low, gold is relatively cheap. Compare the current ratio to the 20-year historical average of ~67:1.
How the Gold Silver Ratio Works
The gold silver ratio is one of the oldest and most watched metrics in precious metals investing. At 87:1, silver would need to nearly double in price (or gold fall ~23%) to return to the historical average. This ratio has ranged from below 20:1 to above 120:1 in modern history.
Historical Context
From 1900-1960, the ratio typically ranged from 15-40:1. It expanded significantly from the 1980s onward, averaging 65-70:1 from 2000-2020. The COVID spike to 120:1 in March 2020 was followed by silver rallying to recover much of the gap. Many investors watch the 80+ level as historically elevated.
Using the Ratio for Rebalancing
Some precious metals investors use the ratio to rebalance: converting silver to gold when the ratio drops below 50, and converting gold to silver when it rises above 80. This strategy exploits relative value rather than trying to predict absolute price direction. Note that transaction costs (premiums) make frequent switching costly.
FAQ
What is the gold silver ratio?
The gold silver ratio tells you how many ounces of silver it takes to buy one ounce of gold. If gold is $2,000/oz and silver is $25/oz, the ratio is 80:1. A higher ratio means silver is cheap relative to gold; a lower ratio means silver is expensive (or gold is cheap).
What is the historical gold silver ratio average?
The 20-year historical average gold-silver ratio is approximately 65-70:1. In the 20th century, many countries maintained a 16:1 legal ratio. The ratio spiked above 120:1 during COVID-19 market panic in 2020, its highest point in recorded history.
Should I buy gold or silver based on the ratio?
The ratio is one input among many. Historically, when the ratio is very high (80+), silver has tended to outperform gold over the following years. When the ratio is low (40-50), gold has tended to outperform. However, past relationships are not guaranteed to repeat.
Does the gold silver ratio predict prices?
Not reliably. The ratio shows relative value but does not predict absolute prices. Both metals could fall together even when the ratio is high. Many precious metals investors use the ratio to rebalance between gold and silver holdings, not to time entry and exit.