The number of ounces of silver required to purchase one ounce of gold — the most-watched ratio in the precious metals world. The ratio has averaged roughly 60–65 since 1970, but spends extended periods above and below that mean: above 80 when silver is historically cheap relative to gold, below 50 when silver is historically expensive. Investors who already hold precious metals exposure use this ratio to decide between the two metals; investors considering precious metals exposure use it to time the entry. It is the single most useful ratio in the space.
Analyst's Note
Statistically, the ratio is mean-reverting, but the mean itself drifts over decades — pre-1971 the ratio was anchored near 16:1 by bimetallic monetary standards; post-1971 it has averaged in the low 60s with significant excursions. Readings above 85 have, since 1970, preceded silver outperformance over the following 18 months in roughly seven of eight instances, with average excess returns above 30%. The mechanism is not magic: silver’s smaller market and higher industrial sensitivity produce sharper rallies once a cycle inflection is established. For the analytical investor, the ratio is an entry timing signal, not a permanent allocation rule. A 1.5σ deviation from the long-run mean is the threshold most practitioners watch; a 2σ deviation is action territory.