DIsclaimer: If you are an experienced investor in precious metals, you are way ahead of me. My articles regarding the spot price of commodity silver target people like me - people who've worked with silver end products such as flatware and hollowware for a number of years and who now find their work more strongly affected by the recent dramatic changes in the spot price of silver.
Here are some articles to read first to get a little background:
- Egypt and short covering cause silver and gold prices to rise
- Silver price vs. gold price - is silver overpriced?
- Silver price decline rate in January twice that of gold
- Gold-silver price ratio poised to break through 50
In recent articles, we've talked about the fact that the price of silver may be too high relative to the price of gold and that silver might decline at a faster rate than gold (or rise more slowly). We've focused on the fact that the ratio of gold to silver has been rising recently, a trend that is not good for silver.
In the past few days, this trend has reversed. After touching almost 50, the ratio has declined back to around 47, a level that has been relatively stable for the past few weeks.
What does this mean? It may mean that this is near the "natural" ratio for the time being. As you ponder whether to buy or sell silver, keep your eyes on this ratio. Here are some helpful charts that illustrate its history.
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