How to Calculate the Gold to Silver Ratio
How to Calculate the Gold to Silver Ratio
The gold-to-silver ratio is a longstanding financial indicator used by investors to evaluate the relative value of gold and silver. It plays a crucial role in determining market trends, identifying investment opportunities, and helping traders make informed decisions about portfolio allocation. In this guide, we’ll walk through how to calculate the ratio, its historical context, what it signals, and how platforms like OneGold enable efficient, real-time trading based on this metric.
What Is the Gold to Silver Ratio?
The gold-to-silver ratio tells you how many ounces of silver are required to purchase one ounce of gold. It is calculated using the following formula:
Gold-to-Silver Ratio = Spot Price of Gold / Spot Price of Silver
For example, if gold is priced at $2,000 per ounce and silver at $25 per ounce, the ratio is 80. This means 80 ounces of silver are equivalent in value to one ounce of gold.
How to Calculate the Gold to Silver Ratio
Calculating the ratio involves three simple steps:
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Find current market prices for both gold and silver. Use reliable sources like OneGold, Kitco, or MacroTrends.
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Apply the formula:
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Gold Price ÷ Silver Price = Gold-to-Silver Ratio
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Example:
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Gold = $1,950/oz
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Silver = $26/oz
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Ratio = 1,950 ÷ 26 = 75
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This calculation can be repeated over time to observe trends or to compare against historical averages.
Why the Ratio Matters: Investment Insights
Investors use the gold-to-silver ratio to:
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Assess Relative Value: A high ratio suggests silver is undervalued; a low ratio suggests the opposite.
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Time Trades: Many use it to shift allocations between gold and silver at historical extremes.
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Hedge Against Market Risk: The ratio can indicate periods of inflation or deflation, helping adjust asset positions accordingly.
Historical Gold to Silver Ratio Trends
Understanding the historical range of the ratio enhances strategic use:
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Ancient and Pre-modern Eras: Ratios as low as 10:1 or 12:1 when both metals circulated as currency.
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U.S. Coinage Act of 1792: Fixed the ratio at 15:1.
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20th Century: The ratio averaged 47:1 before decoupling from monetary systems.
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Modern Highs: Reached over 100:1 during the 2020 COVID-19 crisis, signaling extreme silver undervaluation.
Today, the ratio often fluctuates between 65 and 85, with some investors using 80 as a general benchmark for value imbalances.
Strategy: How to Use the Ratio in Trading
The gold-to-silver ratio supports several strategic approaches:
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High Ratio (>80): Silver may be undervalued. Some investors convert gold into silver.
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Low Ratio (<50): Gold may be a better value. Traders might swap silver for gold.
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Ratio Rebalancing: A method used to incrementally adjust holdings between metals based on movements in the ratio.
These strategies are particularly appealing to long-term investors aiming to accumulate ounces rather than speculate on price.
Monitoring the Ratio with Tools and Charts
To actively monitor the gold-to-silver ratio:
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Use live price feeds from platforms like OneGold.
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Refer to historical charting tools from MacroTrends or TradingView.
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Leverage online calculators, such as those from Calculator Academy, for quick computation.
Why OneGold Is Ideal for Ratio-Based Investing
OneGold enables direct, flexible trading between gold and silver:
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View real-time prices and track the live gold-to-silver ratio.
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Seamlessly swap between gold and silver holdings with low transaction costs.
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Own 100% physically backed metals, stored in high-security vaults in the U.S., Canada, or Switzerland.
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Enjoy industry-low storage fees and full transparency with 24/7 account access.
Unlike traditional dealers or unallocated pool accounts, OneGold empowers investors to react to the gold-to-silver ratio with precision, speed, and security.
Final Thoughts
The gold-to-silver ratio is more than just a number—it's a practical guide for optimizing your precious metals strategy. By learning how to calculate and interpret this ratio, investors can identify opportunities, adjust risk, and diversify portfolios.
With digital investment platforms like OneGold, executing a ratio-driven strategy is easier than ever. You can track prices, swap metals, and manage real gold and silver investments—all from your device, anytime. For investors who want smarter exposure to both metals, understanding and using the gold-to-silver ratio is a vital tool in your toolkit.
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A guide to investing in gold.
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A guide to investing in silver.
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