BMO Warns Investors: Gold:Silver Ratio Near Historic Bottom—What It Means
The comments below are an edited and abridged synopsis of an article by Neils Christensen, Kitco News
The latest report from BMO Capital Markets highlights a striking development in precious metals investing: The gold:silver ratio may be nearing a historic bottom. This trend reflects a dramatic shift in market dynamics, where silver’s performance relative to gold has tightened sharply after a period of divergence. Analysts at BMO warn that this compression could have important implications for investors in 2026.
Traditionally, the gold:silver ratio measures how many ounces of silver are required to buy one ounce of gold. A high ratio typically indicates that silver is cheap relative to gold; a low ratio implies that silver has outperformed its yellow‑metal counterpart. Recently, silver’s rally—fueled by speculative momentum, industrial demand, and strong price gains—has brought the ratio down to levels not seen in over a decade. This compression followed a peak above 100 earlier in 2025 and now sits near historic lows around 50, signaling that silver has been outperforming gold in recent months.
BMO analysts emphasize that a historically low gold:silver ratio often occurs later in precious metals cycles, once silver begins to outperform gold significantly. Silver has surged well above $100 per ounce and remains near multi‑year highs, buoyed by both industrial demand and investor appetite for speculative positions. Unlike gold, whose primary appeal tends to be as a monetary hedge, silver benefits from both investment demand and tangible industrial uses in sectors such as solar energy, electronics and electric vehicles.
However, BMO warns that the current trajectory may not be sustainable without shifts in the underlying fundamentals. While the gold:silver ratio has compressed rapidly, supply constraints and speculative positioning have created price momentum that may be difficult to maintain if industrial demand softens or if market sentiment shifts. The note from BMO suggests that although there may be room for further declines in the ratio, investors should be cautious about assuming that current rates will persist unchanged.
The evolving gold:silver ratio is also influenced by broader macroeconomic forces. A weaker US dollar, ongoing safe‑haven demand, and expectations for potential interest-rate adjustments have supported both metals, but silver’s extended supply deficits and robust industrial appetite have propelled it ahead of gold. This phenomenon has contributed to silver’s significant outperformance, narrowing the gap between the two metals relative to historical norms.
Understanding the gold:silver ratio can provide investors with a lens for assessing relative value within the precious metals complex. A historically low ratio suggests that silver may be richly priced relative to gold, potentially signaling a period of consolidation or correction. Conversely, it may also point to a broader shift in how markets perceive silver’s dual role as both an investment and an essential industrial metal.
For investors, the key takeaway from BMO’s warning is that changes in the gold:silver ratio are not simply technical metrics; they reflect underlying shifts in demand dynamics, market psychology, and economic conditions. Whether silver continues to outperform gold or reverts toward longer‑term averages remains an important question for portfolio allocation and precious metals strategy in 2026.
In summary, the recent compression in the gold:silver ratio underscores evolving market behaviour and highlights the importance of context when interpreting precious metals performance. Investors should weigh both historical patterns and current fundamentals as they consider the implications of this notable shift.
