The gold-to-silver ratio, which represents silver’s value in gold terms, peaked at 123.34 in March.
The ratio meant that an investor could buy 123.34 ounces of silver with a mere ounce of gold. Usually, such a competitive exchange rate for silver attracts demand from bullion investors. Unsurprisingly, it did.
The ratio pulled back a staggering 43% in five months to 72, the lowest since April 2017. This pullback coincided with a rally in silver prices.
Video: Gold-to-silver ratio heading to 15:1?
Industrial Demand Has Bounced Back
Silver has several industrial uses. While demand declined during the pandemic-induced shutdowns, it has started to bounce back.
Amid supply disruptions and soaring demand, it is no surprise that silver prices have taken off. As U.S. dollar debasement continues, precious metals could very likely resume their gravity-defying rallies.
Disclaimer: This article represents the author’s opinion and should not be considered investment or trading advice from CCN.com. Unless otherwise noted, the author has no position in any of the securities mentioned.