The Gold/Silver Ratio Explained—Is Silver A Better Investment than Gold?

The comments below are an edited and abridged synopsis of an article by GoldCore

Silver is a great savings vehicle; both silver and gold are better savings vehicles than paper money, especially over periods  longer than a single year.

The Gold/Silver Ratio Explained—Is Silver A Better Investment than Gold? - BullionBuzz - Nick's Top Six
Gold and silver

This is because governments and banks make sure that more fiat money exists every year. No one can invent or print precious metals, so they retain purchasing power while fiat money cannot.

Every time that government announces new spending or new liquidity, it means they are dealing in things that can be printed to solve problems that they believe can be papered over.

Gold and silver will preserve purchasing power better than fiat money can; ask anyone from Germany. Gold and silver move together against paper money (they correlate). But is silver a better savings vehicle than gold?

The long answer is that sometimes gold is better, and sometimes silver is better. When the correlation between silver and gold is at historically extreme levels, it’s best to buy both metals, but buy more of the cheaper metal.

For thousands of years gold and silver have competed with each other to be used as money and be used as a savings vehicle. Today we can look back over time to see the price, or ratio, at which silver traded in comparison to gold.

Today, on a chart of the past 50 years, silver looks cheap against gold. It currently takes 75 ounces of silver to equal a single ounce of gold. During the Covid crisis, it was best to buy both metals since so much fiat money was printed. However, it was also smart to buy more silver because 120 ounces of silver was equal to one ounce of gold.

Silver is tied to industrial production: It is used in appliances, cars, healthcare, science etc. Gold is meditative, aware that its role in the universe is to reflect others. Thus gold reacts to the panics of fiat money.

During Covid, silver went down compared to gold because the economy shut down so industrial demand for silver dropped, and many investors worried about governments’ printing of fiat money so they moved into physical gold.

“It looks like a great plan to buy silver faster than gold. When silver is priced worse than 80 ounces of gold and combine that idea with buying silver slower than gold when silver is priced at 40 ounces or less per ounce of gold.”

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