Will Silver catch up to gold?

in economics •  5 years ago  (edited)




Historically, in the last 5-10 years, gold has been getting more and more expensive in comparison to silver.
Gold to Silver Ratio - 100 Year Historical Chart


Owing to the fact that gold and silver acquire most of it's 'store of value' status from similar industrial/commercial uses (marginal utility) and the fact that there's limited quantity available, so investors wouldn't sell it so often (historically central banks have maintained a reserve, which provided enough security against how low it can go), silver is expected to go higher to maintain the ratio. In other words, silver and gold have interchangeable use cases (in circuitry, as Au/Ag catalyst that significantly increases throughput) and at a certain point, gold becomes too expensive to have any advantage over silver in those cases. The same can be said about the catalysts Platinum and Palladium (Pt/Pd) which can be used interchangeably and are available in limited quantity. In fact, it's Russia that owns most of the mines that produce these metals. Russian central bank also has a strong position in Gold reserves and only need about $2000 gold price to shift to gold standard, which would make its currency far more attractive and stable of an investment than Dollar (which is overbought). In contrast, Canadian central bank has been selling off all of its gold reserves.

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