What is the gold/silver ratio
The gold/silver ratio tells you how many ounces of silver you need to pay for one ounce of gold. If an ounce of gold costs 70 times as much as an ounce of silver, the ratio is 70. It is a simple number that shows how the prices of the two metals relate, whatever the currency.
How we calculate the ratio
We divide the spot price of gold by the spot price of silver per ounce. Spot prices are wholesale market prices without dealer premiums. Each point on the chart is one daily price. We calculate the ratio from US dollar prices, because it comes out the same in every currency.
How investors use the ratio
Some investors use the ratio to compare which metal is relatively cheaper. When the ratio is high, silver is cheap compared with gold; when it is low, gold is cheap compared with silver. Some then swap part of one metal for the other. The ratio does not predict prices, though: it can stay high or low for a long time.
The ratio and dealer prices
The ratio uses spot prices, but at a dealer you pay a price that includes a premium. Silver coins and bars usually carry a higher premium than gold, and in some countries silver is taxed differently from investment gold. That is why the real price relationship at a dealer differs from the ratio. You can compare current coin and bar prices in our gold and silver categories.