Silver is going to continue the rally Up as Historic Trend shows
Chart Understanding:
-- XAUUSD is price of 1 ounce of Gold in USD. Also known as Spot gold price chart.
-- XAGUSD is price of 1 ounce of Silver in USD. Also known as Spot Silver price chart
Spot Gold to Spot Silver price ratio of last 20 years shows how silver will trend in the near future.
-- When graph goes down, Silver rises.
Analysis
-- Last time when silver was at an all time high $34 USD/ounce, the ratio was at 46:1.
-- The ratio fell below the lower band and thus silver prices fell as mean reversion came to effect.
-- This time, when silver is at $34 USD/ounce, the ratio is at 79:1.
-- If mean reversion will happen this time, then it means silver still has a lot of price hike to catch to attain that.
-- If ratio of 66 is to be attained, keeping gold price constant, the silver price needs to increase to $41.5 USD/ounce, which is an increase of roughly 23% from current price.
As such, silver seems to be a better bet in the current uncertain times to give good returns compared to gold. The historical valuation of both precious metals show that silver has long been lost in the valuation race and has lot to catch.
"A historical analysis by the World Gold Council shows that despite gold’s current higher market value, silver’s intrinsic value is higher due to its relative rarity — five times less abundant than gold (World Gold Council, 2023). As historical and intrinsic value factors realign, silver’s price could adjust to reflect its true worth, potentially exceeding gold’s value in the (distant) future."
-- XAUUSD is price of 1 ounce of Gold in USD. Also known as Spot gold price chart.
-- XAGUSD is price of 1 ounce of Silver in USD. Also known as Spot Silver price chart
Spot Gold to Spot Silver price ratio of last 20 years shows how silver will trend in the near future.
-- When graph goes down, Silver rises.
Analysis
-- Last time when silver was at an all time high $34 USD/ounce, the ratio was at 46:1.
-- The ratio fell below the lower band and thus silver prices fell as mean reversion came to effect.
-- This time, when silver is at $34 USD/ounce, the ratio is at 79:1.
-- If mean reversion will happen this time, then it means silver still has a lot of price hike to catch to attain that.
-- If ratio of 66 is to be attained, keeping gold price constant, the silver price needs to increase to $41.5 USD/ounce, which is an increase of roughly 23% from current price.
As such, silver seems to be a better bet in the current uncertain times to give good returns compared to gold. The historical valuation of both precious metals show that silver has long been lost in the valuation race and has lot to catch.
"A historical analysis by the World Gold Council shows that despite gold’s current higher market value, silver’s intrinsic value is higher due to its relative rarity — five times less abundant than gold (World Gold Council, 2023). As historical and intrinsic value factors realign, silver’s price could adjust to reflect its true worth, potentially exceeding gold’s value in the (distant) future."
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