What is the gold-silver ratio?
The gold-silver ratio is a key figure that indicates the price ratio between the precious metals gold and silver. It shows how many ounces of silver are needed to buy one ounce of gold. Currently (as at June 2025), the price of gold is around USD 3,300 per troy ounce, while an ounce of silver is trading at around USD 35. This results in a gold-silver ratio of 94:1.
This means that one ounce of gold is currently worth as much as 94 ounces of silver - a historically high value that many market observers regard as a signal that silver is undervalued. The ratio is therefore not just a calculated value, but also an indicator of relative price ratios between the two precious metals.
What does the ratio say?
The gold-silver ratio is often used to identify price distortions. If it is very high - as is currently the case - silver is classified as cheap in relation to gold. A low ratio, on the other hand, indicates a relative strength of silver or a weakness of gold. Historically, the ratio has moved along completely different lines for centuries.
A look at history
In ancient times, silver was valued much closer to gold. In Rome, the legally established ratio was 12:1 for a long time. The ratio also fluctuated between 10:1 and 20:1 in the Middle Ages and early modern times. It was only with the abolition of the bimetallic standard and the complete monetization of gold in the 20th century that the ratio shifted permanently to the disadvantage of silver.
A defining example from the recent past is January 18, 1980, when silver reached a record high of USD 49.45 on the basis of the London reference price, while gold stood at USD 835 - a ratio of just 17:1. This was the turning point of an intensive bull market in precious metals, driven by the Hunt brothers, among others, who bought up a large part of the silver market.
The ratio subsequently rose significantly. While gold reached its high at the time of around USD 1,900 in 2011, silver made it back to just under USD 50 - a ratio of around 38:1. The gap then widened again.
The extreme value came in spring 2020: during the coronavirus crisis, the gold-silver ratio briefly climbed to over 120:1, the highest value ever recorded - reflecting a massive flight into gold, while silver was under severe pressure as an industrial metal.
Gold-silver ratio: what is "high", what is "low"?
There is no general valuation, but long-term averages provide guidance. Historically, the ratio has often been between 50 and 60. Many analysts regard values above 80 as an indication of relative weakness in silver and below 40 as a sign of a silver rally. At the current level of 94:1, the ratio is therefore well above the long-term average.
Gold in crisis, silver on the upswing?
Both precious metals are considered investment instruments, but they react differently to economic developments. Gold usually benefits in phases of economic, financial and geopolitical crises. It is primarily bought as a currency reserve and as a hedge against wealth and inflation - by governments, central banks and private investors.
Silver, on the other hand, is a hybrid metal: in addition to its investment function, it is a highly sought-after industrial material - for example in electrical engineering, photovoltaics, battery technology and medical technology. During economic upswings, the demand for silver therefore often increases significantly - which can boost its price.
This also explains the divergence in times of crisis. While gold is sought after as a safe haven, silver suffers from a decline in demand from industry. In upswing phases, possibly with rising inflation at the same time, the ratio can shift back in favor of silver.
The natural ratio: geology vs. the stock market
An interesting comparison emerges when you look at the deposits of both metals. According to the US Geological Survey (USGS), around 216,000 tons of gold and 1,740,000 tons of silver have been mined worldwide to date - a ratio of around 1:8. The known reserves also show a similar picture: around 64,000 tons of gold compared to around 640,000 tons of silver. The "natural" ratio would therefore be somewhere between 1:8 and 1:10.
However, the market values things differently: prices reflect not only supply and demand, but also storability, transport costs, liquidity, monetary relevance and investment behavior. As a result, the actual ratio has usually been between 40 and 100 for many decades.
Purchasing power as a comparative value
Another approach comes from monetary historical analysis. Historically, an ounce of gold often corresponded to the price of a high-quality men's suit - this correlation can be proven over many decades. Goldreporter carried out an analysis of suit prices in mail order catalogs - with data dating back to the 1930s.
While an average of one ounce of gold was actually required to purchase such a man's garment in the past (currently significantly less), according to Goldreporter analysis it costs an average of around 30 ounces of silver.
If this ratio were applied to today's prices, the silver price would have to be around USD 110 at a gold price of USD 3,300 in order to achieve a ratio of 30:1. In reality, however, silver is well below this at 35 US dollars. Alternatively, at the current silver price, the gold price would have to fall to USD 1,050 in order to achieve a ratio of 30:1. However, the current ratios indicate considerable catch-up potential for silver - at least from a long-term perspective.
Ratio trading: the strategy behind the ratio
Some investors actively use the gold-silver ratio for tactical shifts. This strategy is known as ratio trading. This involves swapping gold for silver when ratios are extremely high - in the expectation that the ratio will normalize again. At low ratios, the swap is then reversed.
Example: Anyone who traded gold for silver at a ratio of 120:1 in 2020 could benefit from a fall to around 64:1 in the following two years - provided the trade was pursued consistently.
However, this strategy is not without risk. The ratio can remain at extreme levels for years. In addition, silver is significantly more volatile than gold - both in terms of price movements and trading volumes.
Conclusion
The gold-silver ratio provides a simple but effective guide for assessing the relative valuation of the two precious metals. Most recently, the ratio of 94:1 signaled a clear dominance of gold - and thus a potential undervaluation of silver. Conversely, one could also speak of an overvaluation of gold. However, the lack of record highs for silver clearly points to its catch-up potential.
Long-term historical, geological and purchasing power-related considerations also suggest this. Whether this price adjustment will be realized sustainably at some point depends on many factors - from economic development and industrial demand to geopolitical tensions, but also on the general barriers and ownership structures on the silver market. For example, the US investment bank JP Morgan is one of the largest silver owners in the world - with corresponding market influence.
For investors, the gold-silver ratio is not a buy or sell signal in the traditional sense. However, it offers valuable clues for taking a more differentiated view of precious metal investments - especially for those who think anti-cyclically and take a long-term view.
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