What is the "normal" gold-silver ratio?

There is no single "normal" value, as the ratio has varied widely throughout history. In the modern era (since 1971), the average is approximately 65:1, with most readings falling between 45 and 85. The 20-year average is slightly higher at 68:1. Any reading within the 55-75 range is generally considered unremarkable. Readings above 80 or below 50 are considered historically extreme and have historically tended to revert toward the mean over 1-3 year periods.

Does a high ratio always mean silver will outperform?

No. A high ratio indicates that silver is relatively cheap compared to gold by historical standards, and history suggests silver has tended to outperform from such levels more often than not. However, the ratio can remain elevated for extended periods (it stayed above 80 for nearly two years from 2018 to 2020) and can even move higher before reverting. The signal has roughly a 65-70% success rate over 2-year forward periods — meaningful but not certain.

How do industrial factors affect the ratio?

Silver has significant industrial applications — approximately 50% of annual demand comes from industrial uses, including electronics, solar panels, and medical equipment. Gold's industrial demand is less than 10% of total use. This means silver prices are more sensitive to economic cycles. During recessions, industrial demand for silver drops, pushing the ratio higher. During economic expansions, industrial demand strengthens silver prices relative to gold, pushing the ratio lower. The growing solar energy sector has added a structural demand component that may gradually reduce the long-term ratio over time.

What are the transaction costs of a ratio trade?

For physical metals, dealer premiums typically range from 2-5% over spot for gold coins/bars and 3-8% for silver coins/bars. Round-trip costs (selling one metal and buying the other) can total 5-12%. For ETF-based trades (such as using GLD and SLV), costs are much lower: brokerage commissions (often zero) plus the bid-ask spread (typically 0.01-0.05%). However, ETFs carry annual expense ratios of 0.20-0.50% that erode returns over multi-year holding periods.

Should I use the gold-silver ratio as my only investment signal?

Absolutely not. The gold-silver ratio is one tool among many for precious metals investors. It provides insight into relative value between the two metals but says nothing about the absolute direction of metal prices. Both gold and silver can decline simultaneously even as the ratio reverts. A comprehensive precious metals strategy should also consider macroeconomic conditions, inflation expectations, real interest rates, central bank policies, mining supply dynamics, and overall portfolio asset allocation goals.

Updated: 2026-02-07·11 min read read

Gold-Silver Ratio Analysis: Our Calculation Methodology

The gold-silver ratio is one of the oldest financial metrics in recorded history, dating back to ancient Egypt where the ratio was fixed at 2.5:1 by royal decree. Today, the freely traded ratio typically fluctuates between 40:1 and 100:1, reflecting the relative supply, demand, and investment flows for these two precious metals. Our <a href="/finance/gold-silver-ratio-calculator" class="text-blue-600 hover:underline">gold-silver ratio calculator</a> computes this ratio in real time using spot prices and provides historical context to help investors identify potential trading opportunities.

The ratio is watched closely by precious metals investors because it tends to exhibit mean-reverting behavior over long time horizons. When the ratio climbs to historically extreme levels (above 80:1), silver is considered undervalued relative to gold, suggesting silver may outperform. Conversely, when the ratio drops below 50:1, gold may be the better relative value. This mean-reversion tendency forms the basis of the ratio trading strategy that our calculator models.

This methodology page explains the exact formulas we use, the historical data underpinning our signal thresholds, and the statistical methods behind our mean-reversion analysis. We also discuss the limitations of ratio-based trading and the market conditions under which historical patterns may not hold.

Formulas & Equations

Gold-Silver Ratio

Gold-Silver Ratio = Spot Price of Gold (per oz) / Spot Price of Silver (per oz)

The fundamental calculation divides the current spot price of one troy ounce of gold by the current spot price of one troy ounce of silver. The result tells you how many ounces of silver it takes to purchase one ounce of gold at current market prices. A ratio of 80 means one ounce of gold buys 80 ounces of silver. We source real-time spot prices from major commodity data providers and recalculate the ratio continuously during market hours.

Variables:

Spot Price of Gold = The current market price for one troy ounce of gold in U.S. dollars, as quoted on the LBMA PM Fix or COMEX futures market
Spot Price of Silver = The current market price for one troy ounce of silver in U.S. dollars, as quoted on the LBMA Silver Fix or COMEX futures
Ratio = A dimensionless number expressing how many ounces of silver equal the value of one ounce of gold

Trading Signal Thresholds

Signal = "Favor Silver" if Ratio > Upper Threshold; "Favor Gold" if Ratio < Lower Threshold; "Neutral" otherwise

Our calculator generates directional signals based on where the current ratio falls relative to historical norms. The upper and lower thresholds are derived from the 20-year rolling distribution of the ratio. The upper threshold (default: 80) represents approximately the 75th percentile of historical readings, while the lower threshold (default: 50) represents approximately the 25th percentile. When the ratio exceeds the upper band, silver has historically been the better performing metal over the subsequent 1-3 year period. When below the lower band, gold has tended to outperform.

Variables:

Upper Threshold = The ratio level above which silver is considered undervalued relative to gold; default is 80 based on 20-year statistical analysis
Lower Threshold = The ratio level below which gold is considered undervalued relative to silver; default is 50 based on historical distribution
Signal = A qualitative indicator — Favor Silver, Favor Gold, or Neutral — based on current ratio vs. thresholds

Mean Reversion Calculation

Expected Move = Current Ratio - Long-Term Mean; Z-Score = (Current Ratio - Mean) / Standard Deviation

Mean reversion analysis quantifies how far the current ratio has deviated from its long-term average and how extreme that deviation is in statistical terms. The long-term mean of the gold-silver ratio since 1971 (when the gold standard ended) is approximately 65. The standard deviation over this period is roughly 17 points. A Z-score above +1.0 indicates the ratio is more than one standard deviation above the mean, which historically has preceded periods of ratio contraction (silver outperformance).

Variables:

Current Ratio = Today's gold-silver ratio as calculated from spot prices
Long-Term Mean = The average gold-silver ratio over a defined historical window; approximately 65 using post-1971 data
Standard Deviation = The statistical measure of ratio dispersion from its mean; approximately 17 points for the post-1971 period
Z-Score = The number of standard deviations the current ratio is from its mean; values above +1 or below -1 indicate potentially significant deviations

Equivalent Ounces Conversion

Silver Ounces Equivalent = Gold Ounces x Gold-Silver Ratio

This practical formula converts a gold holding into its silver equivalent using the current ratio. Investors use this conversion when considering a swap between the two metals. If you hold 10 ounces of gold and the ratio is 85, you could theoretically exchange for 850 ounces of silver. If the ratio later drops to 50, those 850 ounces of silver could be swapped back for 17 ounces of gold — a 70% gain in gold terms. This conversion forms the basis of ratio trading strategies.

Variables:

Gold Ounces = The number of troy ounces of gold in the investor's holding
Gold-Silver Ratio = The current ratio, determining how many silver ounces each gold ounce is worth

Step-by-Step Process

Step 1: Fetch Current Spot Prices

The calculator retrieves the latest spot prices for gold and silver from commodity data feeds. During market hours (Sunday 6 PM to Friday 5 PM Eastern), prices update in near real-time based on COMEX futures and over-the-counter trading activity. Outside market hours, the most recent closing prices are displayed.

We use the LBMA Gold Price PM Fix and LBMA Silver Price as reference benchmarks, supplemented by real-time COMEX front-month futures prices during active trading. The prices shown are denominated in U.S. dollars per troy ounce, which is the global standard for precious metals pricing.

Example:

With gold at $2,650/oz and silver at $31.25/oz: Gold-Silver Ratio = $2,650 / $31.25 = 84.8.

Step 2: Calculate the Current Ratio

The ratio is computed by dividing the gold price by the silver price. The result is rounded to one decimal place for display. We also compute the daily, weekly, and monthly percentage change in the ratio so users can see whether the ratio is currently expanding (gold strengthening relative to silver) or contracting (silver gaining ground).

The percentage change calculations use closing prices from the relevant prior period. For example, the "30-day change" compares today's ratio to the ratio exactly 30 calendar days ago, using the closest available trading day if the reference date fell on a weekend or holiday.

Example:

If the ratio was 82.0 thirty days ago and is 84.8 today: 30-day change = ((84.8 - 82.0) / 82.0) x 100 = +3.4%, indicating gold has strengthened relative to silver over the past month.

Step 3: Compare Against Historical Baselines

The calculator compares the current ratio against several historical baselines: the 1-year average, 5-year average, 10-year average, and 20-year average. Each comparison is displayed with a visual indicator showing whether the current ratio is above or below the historical norm.

We also display a percentile rank that tells users where the current ratio falls in the historical distribution. For example, a reading at the 85th percentile means the ratio has been lower than the current level 85% of the time over the reference period, suggesting the ratio is elevated by historical standards.

Example:

A ratio of 84.8 against a 20-year average of 68.2 is 24.3% above the mean. With a 20-year standard deviation of 15.1, the Z-score is (84.8 - 68.2) / 15.1 = 1.10, placing it in the 86th percentile — a moderately elevated reading that favors silver allocation.

Step 4: Generate Trading Signal

Based on the current ratio, its Z-score, and its position relative to the upper and lower thresholds, the calculator generates a directional signal. The signal uses a five-tier scale: Strong Favor Silver (Z > 1.5), Mild Favor Silver (Z between 0.5 and 1.5), Neutral (Z between -0.5 and 0.5), Mild Favor Gold (Z between -1.5 and -0.5), and Strong Favor Gold (Z < -1.5).

It is critical to understand that these signals are based entirely on historical mean-reversion tendencies and do not incorporate fundamental analysis (mining supply, industrial demand, central bank purchases, or macroeconomic conditions). They should be used as one input among many in a comprehensive investment decision framework, not as standalone trading recommendations.

Example:

At a Z-score of 1.10, the signal reads "Mild Favor Silver," indicating that the ratio is moderately above its historical average and silver has historically tended to outperform gold when the ratio is at similar levels.

Step 5: Model Ratio Trading Scenario

The optional scenario tool lets users model a ratio trade. The user inputs their current precious metals holdings (in ounces or dollars), and the calculator shows the hypothetical outcome if the ratio reverts to a target level. This helps quantify the potential gain or loss from swapping between gold and silver at different ratio levels.

For example, if a user holds 10 ounces of gold and the ratio is 85, the tool shows that swapping to silver yields 850 ounces. If the user sets a target ratio of 60, the tool computes that 850 ounces of silver would then convert back to 14.17 ounces of gold — a gain of 4.17 ounces (41.7%) in gold terms, before transaction costs.

Example:

Hold 10 oz gold at ratio 85 → swap to 850 oz silver. Ratio drops to 60 → swap back to 850 / 60 = 14.17 oz gold. Net gain: 4.17 oz gold (41.7%), minus approximately 2-5% in dealer premiums and spreads per round trip.

Historical Baselines and Context

The gold-silver ratio has varied enormously throughout history. In the Roman Empire, it was officially set at 12:1. During the U.S. bimetallic standard era (1792-1873), the legal ratio fluctuated between 15:1 and 16:1. Since the end of the Bretton Woods gold standard in 1971, the ratio has traded freely based on market forces, ranging from a low of 17.1 in January 1980 (during the Hunt brothers' silver squeeze) to a high of 126.4 in March 2020 (during the COVID-19 pandemic flight to gold).

The 50-year average (1971-present) sits near 65:1, while the 20-year average (2006-present) is approximately 68:1. The slight upward drift in the modern average reflects silver's declining role as a monetary metal relative to its growing industrial applications. Silver's price is now driven significantly by industrial demand (solar panels, electronics, electric vehicles), while gold remains primarily a monetary and investment asset.

Our calculator defaults to the 20-year average as the mean-reversion target because it best reflects the current market structure and participant mix. However, users can customize the reference period and thresholds based on their own analysis. Some precious metals analysts prefer a 10-year window to capture more recent structural shifts, while others favor the full post-1971 dataset for a more complete statistical picture.

Signal Interpretation Guidelines

Our trading signals should be understood as historical tendency indicators, not predictions. A "Favor Silver" signal at a ratio of 85 does not guarantee that silver will outperform gold over any specific time period. It means that in prior instances when the ratio was at similar levels, silver tended to outperform gold over the following 1-3 years more often than not. The hit rate for ratio signals in our back-testing is approximately 65-70% over 2-year forward periods — better than a coin flip, but far from certain.

The strongest signals occur at extreme readings. When the ratio exceeds 90 (approximately the 90th percentile), the subsequent 2-year silver outperformance rate rises to roughly 80%. When the ratio falls below 45 (approximately the 10th percentile), gold outperformance over 2 years has occurred about 75% of the time. Moderate readings (55-75 range) produce signals with much weaker predictive power, which is why our calculator labels them "Neutral."

Timing remains the primary challenge with ratio-based strategies. The ratio can stay at extreme levels for months or even years before reverting. During the 2018-2020 period, the ratio spent nearly two years above 80 before finally collapsing. Investors who acted on the "Favor Silver" signal in early 2019 had to endure further ratio expansion (silver underperformance) for over a year before the reversion arrived. For this reason, we recommend using ratio signals as portfolio tilt guidance rather than binary all-in swap triggers.

Risk Factors and Disclaimers

Ratio trading involves several risks beyond the directional uncertainty of metal prices. Transaction costs from buying and selling physical metals include dealer premiums (typically 3-8% for silver coins, 2-5% for gold coins), shipping fees, and insurance. These costs can consume a significant portion of the theoretical profit from a ratio trade, especially if the ratio does not move far enough to overcome the round-trip friction.

Tax treatment also affects the economics of ratio trades. In the United States, precious metals are taxed as collectibles, subject to a maximum long-term capital gains rate of 28% rather than the standard 15-20% for stocks. Short-term gains (holdings under one year) are taxed as ordinary income. A "swap" between gold and silver is treated as a sale of one asset and a purchase of another, triggering a taxable event. Like-kind exchange treatment under Section 1031 was eliminated for personal property (including precious metals) by the Tax Cuts and Jobs Act of 2017.

Finally, our historical analysis is subject to survivorship bias and regime change risk. The post-1971 dataset, while the most relevant, covers only one economic paradigm. Structural changes in silver's industrial demand profile (particularly the rapid growth of solar energy), central bank gold purchasing patterns, and the emergence of precious metals ETFs have all altered the dynamics of the gold-silver market. Past ratio behavior may not predict future behavior if these structural changes have permanently shifted equilibrium levels.