A gold to silver ratio of 88 points is not sustainable during a gold bull market. It is a matter of time until silver will react, to the upside, to rebalance is value relative to gold.
RELATED – Silver forecast 2025
The gold-to-silver price ratio is a crucial indicator for assessing the relative value of these two precious metals. Historically, the ratio has fluctuated, but when it climbs above 88, it suggests that silver is significantly undervalued compared to gold.
Over the past five decades, silver has only sporadically moved above this threshold of 88 points, signaling moments of extreme undervaluation.
At this point in time, it is fair to say that silver is the most undervalued metal in the precious metals universe.
Understanding the relationship between gold and silver is key to understanding why the gold-to-silver ratio matters. Typically, gold has been seen as a store of value, and silver, while also a precious metal, has often lagged in price appreciation. However, the gold-to-silver ratio has shown that periods of extreme undervaluation, represented by values above 88, are not sustainable for long.
When the ratio hits or exceeds this level of 88 points, silver is being priced at an unusually low value relative to gold.
This discrepancy creates a powerful buying opportunity for those looking to capitalize on silver’s potential.
As history has shown, such imbalances rarely last. Eventually, silver tends to ‘catch up’ to gold, resulting in a potential price correction or increase that narrows the ratio.
The chart shown below helps visualize this pattern, showing how silver has sporadically risen above 88 points relative to gold, but each time it has eventually resolved. When silver is undervalued to this extent, it is only a matter of time before the market corrects itself. This is especially true when considering the industrial demand for silver, which has been rising steadily due to its essential role in industries like electronics, photovoltaics, and electric vehicles.
In conclusion, the gold-to-silver ratio above 88 is a clear signal that silver is currently in an extreme undervaluation state. Investors should closely monitor this trend, as silver has historically tended to resolve such imbalances with upward movement.
As the industrial demand for silver continues to increase, the resolution of this ratio could be a significant catalyst for silver’s price growth.
Again, silver is the most undervalued metal in the precious metals universe.
