Since early July 2024, the gold-to-silver ratio chart has fallen near 70 points. A tiny push higher in the price of silver and this ratio breaks down which will trigger bullish energy in the silver market.
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We explore a fascinating phenomenon linked to the gold-to-silver ratio. In a natural way, the gold-to-silver ratio chart concludes that silver has the potential to stage epic price swings, from time to time. They tend to result in epic silver rallies that go into history books.
By analyzing historical data and observing the pattern, we notice the potential for significant price movements in silver whenever the ratio drops below the 80 to 100x range.
Understanding the Gold-to-Silver Ratio
The gold-to-silver ratio is a simple metric that compares the price of gold to that of silver. It is calculated by dividing the price of gold per ounce by the price of silver per ounce.
Historically, this ratio has exhibited considerable fluctuations, influenced by various factors, including market sentiment, economic conditions, and supply and demand dynamics.
However, epic turning points have been registered in the 80-100 points area. More importantly, any drop below 80 points came with strong silver price action.
July 16th, 2024 – The big level to watch for the gold to silver ratio is 65 points: once below 65 points, silver has historically been able to stage an historic rally. However, very often, 65 points in the gold-to-silver ratio acted as support, meaning resistance in the price of silver. With a gold price steady around 2340 USD/oz, a gold-to-silver price ratio gives 34-37 USD/oz for silver as THE decisive price point. This is consistent with all our silver analysis so far in which we have always featured $34.70/oz as a critical price point (also the first bullish silver target).
September 4th, 2024 – The gold-to-silver price ratio continues to trade around 80 points. Silver had an amazing opportunity to stage an epic rally, after silver’s breakout in April, pushing the gold to silver ratio to the 75 point area (an important decision point for an accelerate move higher in the price of silver). However, the time was not right, the market was not ready for silver to move to ATH.
The Phenomenon of Epic Silver Rallies
Over the past 50 years, a pattern has emerged in the gold-to-silver ratio that captures the attention of astute investors. Whenever the ratio enters the 80 to 100x range, it has consistently preceded epic rallies in the price of silver. Let’s examine four notable instances when this pattern unfolded: 1991, 2002, 2009, and 2020.
- 1991: A catalyst for silver’s surge. In 1991, the ratio breached the 80 to 100x range, signaling a prime opportunity for investors. Following this event, silver experienced an impressive rally, with prices soaring over the subsequent years. The surge demonstrated the potential for significant returns and highlighted the importance of recognizing patterns within the precious metals market.
- 2002: Silver’s secular bull run. Another remarkable instance occurred in 2002 when the ratio once again entered the 80 to 100x area. Silver responded with a monumental rally, solidifying the notion that this range acted as a catalyst for the white metal’s price surge. Investors who identified this opportunity reaped the rewards of a substantial market upswing.
- 2009: Seizing the moment. During the global financial crisis of 2008-2009, the ratio surpassed the 80 to 100x mark, setting the stage for yet another spectacular silver rally. As market uncertainty prevailed, investors turned to silver as a safe haven asset, driving up its price significantly. This event demonstrated the potential for silver to outperform in times of economic turmoil.
- 2020: A modern-day phenomenon. In the wake of the COVID-19 pandemic, the ratio once again ventured into the 80 to 100x range, capturing the attention of investors worldwide. As economic uncertainties loomed, silver experienced a remarkable rally, affirming the pattern observed over the past decades. This recent event further solidifies the notion that the ratio can serve as a valuable indicator for potential silver price movements.
The Gold-to-Silver Ratio and Historic Silver Rallies
The historical evidence suggests that the gold-to-silver ratio entering the 80 to 100x range may act as a signal for an important turning point in favor of silver. This ratio is not a timing indicator though, a turning point can last months or even quarters.
Update July 16th, 2024 – Gold/silver has dropped below 80 points since May, it is still below 80 points since then. This is an important evolution. It is breaking news. Once below 65 points, we forecast the target area indicated on the chart to be hit: 40 points. This coincides with 48-50 USD/oz in the price of silver. A potential historic silver rally is upon us?
Anecdotally, after 3 years of silence about silver’s price, the Wall Street Silver group is tweeting again about silver’s price. Not only that, their focus on a “silver squeeze.”
Gold and silver charts
We have been looking at one specific ratio chart, above: the gold to silver ratio. It also is insightful to check the gold and silver price charts separately against each other.
The pitfall to avoid – picking the right timeframe, certainly do not pick lower timeframes.
Below is an interesting post on X that highlights the longer term gold price chart and silver price charts:
$SILVER is in historical, long-awaited breakout-mode.
With gold´s mega breakout 7 months ago, the PM bull resumed.
Now silver is about to follow gold.
Said for years my minimum price target is 370, and it still is.
There has truthfully never been a bigger opportunity. Or threat. pic.twitter.com/Bs1nSkC9d6— Graddhy – Commodities TA+Cycles July 12, 2024
As seen, silver is lagging gold. This is exactly what the gold to silver ratio chart has been telling us. Silver will need to catch up, which it will do sooner or later. In that scenario, it will fall below 65 points (as outlined above). This will trigger in a silver run to the $48-50 area.
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