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GSR declines, as silver gains on gold

Precious metals investors often use the gold-silver price ratio to decide which metal to buy.  Known as the GSR, it is derived by dividing the price of gold by the price of silver.

A high GSR, a number above 60, over the past few decades has meant that silver is the better investment.  A GSR below 60, gold.

In recent years, the GSR has been well above 60, hitting 104 a few months ago, which meant that silver was by far the better investment.  Now the GSR is about 80, which means that silver has gained on gold.  Yet, it has far to go to achieve a ratio of 60.

Gold usually moves first at the beginning of a precious metals bull market.  But the GSR remains an important indicator.

In my 48-year career as a precious metals’ bullion dealer, I’ve seen the GSR at the 100 level only once before, back in the early 1990s.   And, I’ve seen it at 17 in 1980, when, of course, gold was the better buy.

In the bull market of 2008-2011, the GSR dropped to about 35 in 2011, which meant that silver holdings should have been switched to gold.  (Actually, the 2008-2011 precious metals run-up was a continuation of the bull market that started in 2000, with the dot-com bust.)

Investors with less than $50,000 should probably consider silver, 90% silver coins being my preference.  They give greater flexibility when converting back to cash.

 

7 Responses to “GSR declines, as silver gains on gold”

  1. Karl Kagarise

    It seems a bit “unfair” to only get spot price on junk silver when selling back to you guys with premiums more like $4 over spot. I realize you guys have to make a profit, but $4 an ounce? GREEDY

    Reply
    • Bill Haynes

      Premiums too high on Silver Eagles. Also, if silver goes to $50-$75/oz, a Silver Eagle would be difficult to negotiate for an “everyday purchase.” Dimes (0.0715 oz.) and quarters (0.178 oz.) would work better.

      Reply
  2. Klaus F Volk

    The GSR a few months ago actually hit 124, to my recollection, significantly higher than your mentioned 104.

    Reply

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