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| Pressing Questions Asked by Gold & Silver Investors... | | |
We get lots of questions from the public about precious metals.
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Some people are curious about the basics.
Others are skeptical about the case for owning gold and silver. Still, others are longtime customers who have highly specialized inquiries.
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Here are two very common questions...
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| QUESTION: What Is the Gold:Silver Ratio and Why Is It Important? | | |
ANSWER: Simply put, the gold:silver ratio measures how many ounces of silver it takes to buy one ounce of gold at any given time. Investors who are considering how to allocate their wealth between the two metals may want to favor gold when the ratio is low and favor silver when it is high.
The ratio ranged between 80:1 and 90:1 throughout most of last year's trading. It got as high as 130:1 during the height of the pandemic panic of 2020. Today it stands at just under 90:1.
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Although the gold:silver ratio is below its all-time high, it remains highly elevated on a historical basis. In 2011, gold sold for as low as 32 times the price of silver.
Going back many decades, a ratio of 16:1 has been observed.
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If the gold:silver ratio narrows and moves toward historical benchmarks, that inherently means the silver price is dramatically outperforming gold. Outperformance of silver tends to happen during the latter half of a precious metals bull market.
Since silver tends to be the more volatile of the two metals (amplifying gold's gains on the upside as well as gold's declines on the downside), relative strength in silver tends to be a bullish indicator for the entire precious metals complex.
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| QUESTION: What Are the Key Differences Between Coins and Rounds… Which is Better? | | |
ANSWER: Coins are typically issued by government mints such as the United States Mint, the Royal Canadian Mint, the Perth Mint (Australia), and others.
Coins typically carry an official face value and are considered legal tender in the countries that issue them.
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In the first 80 years of our nation's history, private mints produced various dollar denominations of gold and silver coins – until the federal government seized a monopoly on minting of coinage.
Rounds are standardized bullion items that are minted (or "coined") by private mints and come in a variety of designs that may or may not emulate the appearance of traditional coins.
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Unlike coins, rounds are not typically recognized as legal tender (though they can legally be used in barter transactions based on their metal content). Most silver rounds are made of .999 pure silver – the exact same weight and purity as U.S. Silver Eagle coins.
However, rounds sell at a large discount to Eagles and at still-meaningful discounts to most silver coins issued by foreign governments. For investors looking to acquire the most metal for their dollar, rounds are the better buy.
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| This copyrighted material may not be republished without express permission. Offer only available through email promotion. Offer does not apply to previous orders and may not be combined with any other offer or program. Special shipping rates or other restrictions may apply to international orders. The information presented here is for general educational purposes only. Money Metals Exchange and its staff do not act as personal investment advisors. Nor do we advocate the purchase or sale of any regulated security listed on any exchange for any specific individual. While our track record is excellent, investment markets have inherent risks and there can be no assurance of future profits. You are responsible for your investment decisions, and they should be made in consultation with your own advisors. By purchasing from Money Metals, you understand our company is not responsible for any losses caused by your investment decisions, nor do we have any claim to any market gains you may enjoy. Money Metals Exchange is not a regulated trading "exchange" as defined by the CFTC and the SEC. | | |
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