The Importance of Watching the Gold/Silver Ratio

Gary Christiansen, author of The Deviant Investor, joins Kitco Radio’s Al Korelin to discuss the importance of the gold/silver ratio. In the interview, Christiansen provides a basic definition of the gold/silver ratio:

The gold/silver ratio I think is important because it gives an indication of sentiment. And in simple terms, when the ratio is high, meaning like a 70/1, that means silver is really cheap compared to gold.”

Korelin: Gary, how do you feel that the narrative for silver being more of an industrial metal right now is playing into this ratio?

My inclination is that silver is still very much in demand industrially, and is very much in demand as an investment product, but that the futures market have pressured it much lower. But I can’t really prove that.

Korelin: What’s your call on gold and silver, Gary, just based on your research for the next 30 days?

If you look at a number of the technical analysis ratios and oscillators, even going back 30 years, you’ll find that silver is very, very oversold. When a market is that oversold, you have to figure that it’s going to turn at some point – and it always has in history. Today’s as good a day as any.

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