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CEO Corner

Please discuss the Silver Gold Ratio

February 25, 2020

The relationship of the price of silver to gold is an interesting one and that has been subjected to many studies. Many people active in commodity markets track the ratio of the price of silver and gold to generate their own forecasts on precious metal prices and trading decisions.

Historically when gold and silver were both used for money they traded at around a 16:1 ratio (i.e gold was valued at 16 times the price of silver). Over time the price of gold has increased more than silver and the ratio has subsequently also increased. The gold:silver ratio peaked in the summer of 2019 at approximately 83:1 - - the last time the ratio got that high was in 1990.

Brad Cooke, CEO of Endeavour Silver commenting on the gold:silver ratio noted that: “Over the last 100 years silver has become more of an industrial metal and only when investors seek gold as a safe haven do they once again discover the monetary value of silver. That is why it is known as the “poor man’s gold”…”In my view, the ratio could enter into secular decline as global currencies weaken due to a global economic slowdown, higher debt loads, insolvent pension entitlements and continued political uncertainty. Over the next few years the ratio could revert to low levels as the world sorts out the next global debt crisis and investors flock to gold and silver as safe haven assets.”

The gold:silver ratio today (February 25, 2020) is 91.

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