Silver vs Gold? Silver Wins!

Maybe you’ve heard of silver stacking and you’re in love with gold’s more-accessible cousin.  Maybe silver’s never entered your mind unless it was followed by -ware.  Regardless, it’s time to take notice.  Why?

Shortly, silver is much, much more undervalued than gold.  To understand why, you first need to meet the gold/silver ratio. 

Shake hands – now here we go…

The gold/silver ratio is simply the number you get when you divide the price of gold by the price of silver.  Say gold is $1,501 and silver is $17.60.  The ratio is 85.28:1 – That’s 85.28 ounces of silver to one ounce of gold.  Why do you need to know this?

The ratio is the indicator of value between gold and silver.  It tells us when one is cheap in relation to the other – which is a better buy, which should we be holding.  Let’s come back to this, though.

Consider this.  The historical ratio between gold and silver throughout all of recorded human history never climbed above 16:1 (16 ounces of silver to one ounce of gold) until 1873.  In 1873, silver was demonetized in the United States.  Since then the ratio has climbed to as high as 100:1 – but only at certain times.  The ratio climbs to or near this astronomical level only during bear markets.  During bull markets, it comes back home.

That’s right – in every long-term bull market since 1873, silver has always returned to its historical ratio (somewhere between 12 and 16:1).  Since bull markets begin with a high ratio, for metals to return to their historical ratio, silver always outperforms gold.

There.  The secret’s out.  Not only is silver cheaper and much more accessible for the average investor, it’s going to give you a better return every day of the bull market week

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