The Silver To Gold Ratio

5 At the time of this writing, silver’s value measured in dollars and compared to the value of gold measured in kind, is more than 80:1. When gold and silver were real money, whose value was measured by supply, this ratio would suggest the ability to trade 80 ounces of silver for 5 ounces of gold. Today you have to sell 80 ounces of silver for about $1300 dollars in order to buy just one ounce of gold. Applying the Modern AGAU Formula 136% within a 3 year period. Current levels above 80 mark the ninth time this has occurred over the last 35 years. That’s just one reason experts see 20, 30 even 40% annual increases in the silver price over the next 3 years —or more! AGAU Formula Makes the Case for Higher Silver Prices With gold currently trading near $1,300 an ounce, and considering a 38:1 ratio, the case could be made for silver at $34 an ounce. That’s consistent with the 136% rise we have seen over the last 35 years when the ratio reaches or exceeds 80:1. It does not take into consideration a potential rise in the gold price. If we returned to the 16:1 ratio, the case could be made for silver at $81 an ounce. In either case, we are applying the AGAU formula using a dollar-based value of each metal. This begs the question, given the current price for gold, what would the price of silver be if it were a production-based value? According to Keith Neumeyer, CEO of First Majestic Silver, the earth now only produces 9 ounces of silver per ounce of gold. The supply of silver 20 40 60 80 100 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 Gold/Silver Ratio AGAU Ratio for 35 Years As has now been illustrated, coming off the gold standard requires us to make an adjustment to how we use the AGAU formula. Since Nixon took us off the gold standard in 1971, we have to convert the value of each metal to dollars first in order to visualize where each metal should be priced. In January, 1980 we witnessed a time when the value of silver to gold aligned with its historical proportion. Gold rallied to $850 an ounce and silver peaked near $54 an ounce—roughly 16:1 silver to gold. As recently as March 2011, in the midst of a so-called economic recovery, that ratio was 38:1. With the ratio now sitting near 80:1, it’s not hard to believe the ratio could return to 38:1, thus creating an opportunity to trade today’s 80 ounces of silver for more than two ounces of gold. And if the value of each expressed in dollars ever reached the constitutionally correct 16:1, then silver stackers would have an opportunity to trade today’s 80 ounces of silver for 4.7 ounces of gold. In the last 35 years, the ratio has reached 80 or higher eight times. Each time this has happened, the ratio has fallen and the silver price has risen an average of