Gold/Silver Ratio

AAA

DEFINITION of 'Gold/Silver Ratio'

A ratio (X:1), demonstrating how many ounces of silver (X) it takes to purchase one ounce of gold – the fixed variable. Investors use the fluctuating ratio to evaluate the relative value of silver, which determines if it's an optimal time to purchase gold or silver. It also helps investors diversify their precious-metal holdings.

INVESTOPEDIA EXPLAINS 'Gold/Silver Ratio'

Gold's value is highly dependent on its relative scarcity as a good. It is a highly speculative market; however, unlike other speculative markets (such as the oil market) gold is non-consumable, meaning that even when used (e.g. in jewelery), its value can be recovered. Gold has traditionally been viewed as a "safe haven" of value for investors when currency markets are experiencing high rates of volatility.

RELATED TERMS
  1. Barter

    The act of trading goods and services between two or more parties ...
  2. Safe Haven

    An investment that is expected to retain its value or even increase ...
  3. Gold Standard

    A monetary system in which a country's government allows its ...
  4. Precious Metals

    A classification of metals that are considered to be rare and/or ...
  5. Bullion

    Gold and silver that is officially recognized as being at least ...
  6. Silver

    An element commonly used in jewelry, coins, electronics and photography. ...
Related Articles
  1. Economics

    What Is Wrong With Gold?

    Despite its historic and symbolic appeal, this metal is simply a commodity. Here we explore its meaning as an investment.
  2. Economics

    8 Reasons To Own Gold

    This precious metal's rich history stems from its ability to maintain value over the long term.
  3. Fundamental Analysis

    A Silver Primer

    Find out what affects the price of silver, the types of investments that can be made and the methods in which it is traded.
  4. Investing

    A Holistic Approach To Trading Gold

    Combine technicals and fundamentals to tune out noise and confirm trends in this commodity.
  5. Mutual Funds & ETFs

    Exchange Traded Notes - An Alternative To ETFs

    ETNs offer yet another way to track an index. Find out what they have to offer, and what's at stake.
  6. Options & Futures

    Getting Into The Gold Market

    Add some sparkle to your portfolio by getting in on this classic commodity.
  7. Forex Education

    Commodity Prices And Currency Movements

    Find out which currencies are most affected by fluctuations in gold and oil prices, and improve your trading.
  8. Budgeting

    The Gold Standard Revisited

    Think the value of gold is unshakable? Read this chronicle of its rise and fall.
  9. Options & Futures

    Options On Gold And Silver ETFs

    Trading the commodities can mean extra expenses. These commodity-based ETFs give you the flexibility of trading like stocks.
  10. Options & Futures

    Trading Gold And Silver Futures Contracts

    If you are a hedger or a speculator, gold and silver futures contracts offer a world of profit-making opportunities.

You May Also Like

Hot Definitions
  1. Santa Claus Rally

    A surge in the price of stocks that often occurs in the week between Christmas and New Year's Day. There are numerous explanations ...
  2. Commodity

    1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often ...
  3. Deferred Revenue

    Advance payments or unearned revenue, recorded on the recipient's balance sheet as a liability, until the services have been ...
  4. Multinational Corporation - MNC

    A corporation that has its facilities and other assets in at least one country other than its home country. Such companies ...
  5. SWOT Analysis

    A tool that identifies the strengths, weaknesses, opportunities and threats of an organization. Specifically, SWOT is a basic, ...
  6. Simple Interest

    A quick method of calculating the interest charge on a loan. Simple interest is determined by multiplying the interest rate ...
Trading Center