This excellent video from the Youtube channel belangp gives a detailed statistical analysis of the gold to silver ratio. It’s a different take to what we have written recently here: Using the Gold Silver Ratio to Time Buying Silver.
The full video (a compact 9 minutes) is shown below. But here is a summary of what is covered:
A 50 Year Histogram of the Gold to Silver Ratio
First up he puts together a histogram of the gold silver ratio over the past 50 years
This shows how many months during this 50 year period the Gold Silver Ratio was at a specific ratio.
The histogram includes the minimum, average, and median and maximum ratio values over this 50 year period.
Why is the Gold to Silver Ratio Data Not Bunched Around the Average?
He discusses how the gold:silver ratio is not bunched around the average as you would generally expect in a histogram.
Chart Showing the Percentage of Time the Gold/Silver Ratio was Under a Certain Level
The above chart shows:
- 50% of the time the Gold to Silver Ratio was under 56
- 20% of the time the Gold to Silver Ratio was under 35 (Good time to swap silver for gold)
- 80% of the time theGold to Silver Ratio was under 72 (accumulate silver when Gold to Silver Ratio exceeds 72)
Buying silver now and trading for gold when the Gold to Silver Ratio drops below 35 would double the amount of gold you’ll have (after mark-up). See chart below.
What is the Gold to Silver Ratio Showing Now?
The gold silver ratio currently sits at 81.3.
93% of the time the Gold to Silver Ratio was below 81.3 (It’s been higher only 7% of the time in the past 50 years).
So if the Gold Silver Ratio is above 64.1 it’s likely spot silver will outperform silver compared to gold.
If you want to some day trade your silver bought now for more gold later he explains why you should stick to lower premium silver coins, and avoid collectibles.
So while belangp is not currently selling his gold, he is aggressively adding to his silver stockpile.
Below is the full 9 minute video. Certainly worth watching.