The gold silver ratio is one of the most quoted numbers in the precious metals market. It tells you how many ounces of silver it takes to buy one ounce of gold. Analysts use it to compare the two metals, and it often appears on silver charts. This guide explains how the ratio is calculated, what a high or low reading means, and what the ratio cannot tell you.
How the gold silver ratio is calculated
The formula is simple. Divide the price of one troy ounce of gold by the price of one troy ounce of silver, using the same currency and the same time.
Gold silver ratio = gold price per ounce ÷ silver price per ounce
For example, take a hypothetical gold price of $2,400 and a silver price of $30. The ratio is 2,400 ÷ 30 = 80. In other words, one ounce of gold would buy 80 ounces of silver. These figures are for illustration only.
Worked examples
| Gold price (hypothetical) | Silver price (hypothetical) | Ratio | Meaning |
|---|---|---|---|
| $2,400 | $30 | 80 | 1 oz of gold buys 80 oz of silver |
| $2,400 | $40 | 60 | Silver has gained relative to gold |
| $3,000 | $30 | 100 | Gold has gained relative to silver |
Notice that the ratio can change even when only one metal moves. So it always helps to check both prices, not just the ratio.
What a high or low ratio means
A high ratio means silver is cheap relative to gold. It takes more silver to buy the same ounce of gold.
A low ratio means silver is expensive relative to gold. It takes fewer ounces of silver to buy one ounce of gold.
The key word is “relative”. A high ratio does not mean silver is cheap in absolute terms. It only means silver is cheap compared with gold. Both metals could be expensive, or both could be cheap, at the same time.
Why the ratio moves
Gold and silver respond to some of the same forces, such as the US dollar and interest rates. However, silver also depends heavily on industrial demand, while gold is driven more by investment and central bank buying. As a result, the two metals do not move in lockstep.
Silver also tends to move more sharply than gold. During periods of stress, the ratio has often risen as silver fell faster. During strong rallies, it has often fallen as silver rose faster. For more on these forces, see our guide to what drives silver prices.
How people use the gold silver ratio
- To compare value. Analysts use it to judge whether silver looks cheap or expensive relative to gold.
- To track sentiment. A sharply rising ratio can reflect caution in markets.
- To rebalance holdings. Some investors who hold both metals shift between them when the ratio reaches levels they consider extreme.
These are descriptions of how the ratio is used, not recommendations. There is no fixed “normal” level that the ratio must return to, and it can stay high or low for long periods.
Tips for reading the ratio on a chart
- Use prices from the same source and time, such as the daily LBMA benchmarks for both metals.
- Use the same currency and unit for both. Both metals are normally quoted per troy ounce, as our troy ounce silver guide explains.
- Consider a log scale for long periods. Our log vs linear chart guide explains why.
Frequently asked questions
What is the gold silver ratio?
It is the number of ounces of silver needed to buy one ounce of gold, found by dividing the gold price by the silver price.
Is a high gold silver ratio good for silver?
A high ratio means silver is cheap relative to gold. It does not mean silver will rise, or that it is cheap in absolute terms.
Why does the gold silver ratio change?
Gold and silver respond differently to industrial demand, investment flows and market stress, so their prices move at different speeds.
Which prices should I use to calculate the ratio?
Use gold and silver prices from the same source, in the same currency, at the same time. Daily benchmark prices work well for consistency.
Sources
This article is general information, not financial advice. Example prices are for illustration only. The ratio describes relative value and does not predict future prices.
Written and reviewed by the SilverPriceCharts.com editorial team. Sources are linked above.