The Gold-to-Silver Ratio: Why is it important?

For investors in precious metals the gold-to-silver ratio is one of the most important indicators available and can help them decide whether it is the right time to buy or sell their gold or silver bullion. The ratio represents the amount of silver needed to buy an ounce of gold, and it can be calculated simply by dividing the price of gold by the price of silver. 

If you’re making bullion investments or trading in gold, silver and other precious metals, you can use the gold-to-silver ratio as a signal to prompt you to buy or sell. The consensus of investors and experts in this area is that a high ratio favours silver, whereas a low ratio tends to favour gold.  Experienced investors who closely follow the movement of the gold-to-silver ratio regularly use this rule of thumb, trading their silver for gold and vice versa when the ratio rises or drops. 

It is important to remember that the gold-to-silver ratio is not a precise guide to buying or selling bullion, but it is an important and useful measure. Those new to gold and silver trading may find the ratio difficult to follow initially, as it can fluctuate dramatically over any given time period, but with a little experience, investors can learn to read the signals hidden in the rising and falling of the gold-to-silver ratio and profit from the information.

At the beginning of the last century, the ratio was fairly steady and hovered at around 16, due to the fact that many nations were using currencies backed by gold or silver. But as the twentieth century drew on, the ratio began to rise and throughout the last hundred years, the ratio has averaged in the 47-50 range, though it has fluctuated significantly. 

Some experts have predicted that the gold-to-silver ratio will eventually return to its historical pre-1900 level of around 16:1, but this is far from certain, as it would require a significant rise in the price of silver. What is certain is that investors can profit from using the gold-to-silver ratio. Analysing the rise and fall of the ratio over time can reveal useful clues and underlying trends that can inform a successful buying or selling strategy.

For those trading in gold and silver bullion, secure and convenient storage for their physical investments is also an important consideration. Bullion for Less offer two state-of-the-art safe deposit locations in the South Wales region, enabling investors to purchase and store their physical bullion investments under one roof. With Bullion for Less, your gold and silver bullion investments have never been safer or more convenient.

Gold bars an attractive post-Brexit proposition

Now is the time to invest in gold bars! In the wake of the Brexit referendum and the vote to trigger Article 50, as well as the continuing fall in the value of the pound and the rising national debt, UK investors are turning to gold and the demand for bullion is surging.

Demand for gold bullion increased throughout 2016 and the early months of 2017 as investors sought ways to hedge against the growing uncertainty of the economic and political situation. According to reports in the Wall Street Journal, demand for gold bars rose by 39% in 2016 and has continued to rise this year. 

The triggering of Article 50 at the end of March provided another warning about the difficult and uncertain political waters into which both the UK and the European Union are sailing.

The negotiations over the UK’s exit from the EU are likely to be protracted and divisive, and the implications for UK business and for a UK economy that is over £1.84 trillion in debt are worrying. The value of sterling fluctuated wildly this spring and the Euro is also likely to be subject to dramatic changes in value, as Brexit also has implications for the EU. The Union is less cohesive now than at any time since its inception and the economies of several member nations, including those of Ireland, Italy and Greece, are vulnerable. 

Beyond Europe, the political chaos in the United States is also driving diversification into gold bullion. After an initial burst of optimism following the inauguration of President Trump, US markets and stock prices have been behaving skittishly as concern about Trump’s legitimacy and inability to pass his political agenda have knocked confidence. The failure to repeal the Affordable Care Act was a particularly telling blow to investors' early faith in Trump. 

In the light of these political and economic uncertainties, the flight to gold makes sense and is a phenomenon that has been seen many times before. During the global financial crisis that began in 2007, global investment in gold bars rose from 237.7 to 1246.9 metric tons in the space of just four years, as investors sought security in bullion. Given the dramatic scale of the political and economic upheavals threatened by Brexit, demand for gold in the UK is likely to remain strong, and anyone opting to buy gold bars in the current market is making a sound investment. 

If you are considering an investment in physical gold bars, Bullion for Less can help. We purchase directly from manufacturers and can offer the most competitive prices and unparalleled secure storage for your gold. Visit http://www.bullionforless.com to find out more.