The gold/silver ratio
Use the gold/silver ratio as a relative-value lens to time which metal is cheap or rich.
Lesson path
Futures, Indices, and Commodities
Metals
Pass the check before saving this lesson.
Pass the check to unlock nextOpen track mapChange starting pointToday's tiny win: make one idea click.
Use the gold/silver ratio as a relative-value lens to time which metal is cheap or rich.
The simplest spread in metals
The gold/silver ratio is one of the oldest macro tools in the business, and it's stupidly simple: gold's price divided by silver's price. If gold is 2,400 and silver is 30, the ratio is 80. That number means it takes 80 ounces of silver to buy one ounce of gold. The ratio is a snapshot of how the two metals are priced relative to each other — nothing more, nothing less.
Why traders care: the ratio has spent most of the last fifty years bouncing between roughly 40 and 100, with the modern average around 60. When it climbs above 80, gold is expensive compared to silver — historically, that's been a window where silver tends to outperform if metals broadly rally. When it falls below 50, silver is rich compared to gold, and gold often catches up. The ratio mean-reverts. The catch is that the mean-reversion can take months or years.
How to use the ratio without overusing it: treat it as context, not a signal. If you're choosing between a long gold trade and a long silver trade and the ratio is at 90 (extreme high), silver gets a slight edge — you're buying the cheaper metal. If the ratio is at 45 (extreme low), gold gets the edge. But never take a trade just because the ratio is extreme. The ratio has stayed wrong for two-year stretches more than once. You still need a chart-level reason to enter.
Recap: gold price ÷ silver price = the ratio. Above 80 = gold rich. Below 50 = silver rich. Useful for relative value, not as a standalone signal.
Knowledge check
Answer before moving on.
1. Gold is 2,400 and silver is 24. What's the gold/silver ratio, and how would you describe it?
2. The ratio is at 90 — an extreme high. What's the most disciplined use of that information?
Pass the check before saving.
Use the knowledge check first. After you pass it, this card turns into the save-and-continue handoff.