Gold/Silver Ratio


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.

BREAKING DOWN '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.

  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. Bullion

    Gold and silver that is officially recognized as being at least ...
  4. Precious Metals

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

    Any non-traditional asset with potential economic value that ...
  6. Gold Standard

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