Gold-Silver Ratio at 87: Is Silver Now Undervalued?

The Gold-Silver Ratio has reached a remarkable value of 87 – a signal that catches the attention of experienced precious metals investors. But what does this value specifically mean for your precious metals investment and should you actually buy silver now?

What the Gold-Silver Ratio of 87 Means

The Gold-Silver Ratio indicates how many ounces of silver are needed to buy one ounce of gold. A value of 87 specifically means: For the price of one gold ounce, you currently receive 87 ounces of silver.

Historical context of the current ratio:
- Long-term average: about 60-70
- Historical minimum: 15 (1980s)
- Historical maximum: over 100 (2020 during the pandemic)
- Current value: 87

These numbers suggest that silver is currently historically favorably valued relative to gold. Many market experts interpret high ratio values as a buy signal for silver or as an indicator for a possible switch from gold to silver in the portfolio.

Factors Behind the High Gold-Silver Ratio

Several market dynamics are driving the current development of the Gold-Silver Ratio:

Gold demand remains strong:
- Ongoing geopolitical uncertainties
- Central bank purchases at high levels
- Gold preferred as a "safe haven"

Silver under pressure:
- Industrial demand more volatile than gold
- Stronger correlation with stock markets
- Lower liquidity leads to higher volatility

Macroeconomic influences:
- Central bank interest rate policy
- Dollar exchange rate development
- Inflation expectations

Investment Strategy: Buy Silver at High Ratio?

For your precious metals investment, several strategic considerations arise from the current situation:

Arguments for silver purchases:
- Historically attractive valuation compared to gold
- Potential for ratio normalization
- Dual demand: investment and industrial
- Lower entry barriers due to lower individual price

Consider risks:
- Higher volatility than gold
- Storage and transport costs for physical silver
- Industrial demand dependent on economic cycles

Proven strategies:
- Gradual building of silver positions
- Combination of gold and silver for diversification
- Regular review of portfolio weighting

The decision whether you should buy silver now depends on your individual investment strategy, risk tolerance, and portfolio structure. A balanced approach considers both the historical patterns of the ratio and current market conditions.

Conclusion: Weighing Opportunities and Risks

The Gold-Silver Ratio of 87 certainly offers interesting perspectives for strategically oriented precious metals investors. While historical data suggests a possible undervaluation of silver, investors should still take a balanced view of the market situation.

For professional advice on your individual precious metals investment, contact the experts at Auvesta. With years of experience and solid market understanding, Auvesta supports you in finding the right balance between gold and silver for your portfolio.