For many investors, the Gold to Silver Ratio (GSR) is a must watch metric to determine how to maximise the allocation to precious metals that they have made in their portfolio. The GSR is a simple ratio to calculate. It measures how many troy ounces of silver are needed to buy a troy ounce of gold.
As an example, if the gold price was USD $2,000 per troy ounce, and the silver price was USD $40oz, then the GSR would be 50, as you would need 50 ounces of silver to buy 1 troy ounce of gold. The lower the GSR ratio is, the more expensive silver is relative to gold & while a higher GSR indicates that silver is cheap relative to gold.
The gold to silver ratio (GSR) over the past fifty plus years, from the end of the 1960s through to end June 2024.
The GSR closed at 75 at the end of June 2024. That is an extremely high number compared to historical observation, as it is,
1: almost 30% higher than the long-term average GSR of just below 60.
2: almost 400% higher than the all-time low for the GSR which was just 16.
3: More than double the level the GSR has on average sat at when prior precious metal bull markets have ended.
If history is any guide, the current GSR is strongly suggesting that silver is undervalued relative to gold today and may substantially outperform in the years ahead. This is in the accordance with ABC Bullion Report.
