The 75 point level in the gold-silver ratio is historically one of the most important levels. It is now being tested. What’s next?
In this article we look at the possibility of a quick silver run to $50 without using a specific silver chart.
Gold-Silver Ratio – The Importance of 75 Points
As explained in detail in the historical gold-silver ratio chart:
- This ratio has spent most of its time (50 years of data) in the 65 to 95 point range.
- The few times silver reached the 95-point area marked epic undervaluations for the silver price.
- The few times silver fell below 65 points coincided with silver price spikes.
- The 75 point level is a critical level, which usually coincides with an acceleration point in spot silver.
The last point above is important when you compare it to the gold-silver ratio chart below.
The chart speaks for itself: a small move higher in the price of silver, and the chance of an epic rally in spot silver increases exponentially.
Below is the secular gold-silver price chart.
Remark – The huge declines in this ratio, in 1980 and 2011, which coincided with $50 in spot silver. With silver now near $50, we could be looking at $100 silver if the rising trendline connecting 1980 to 2011 is reached in the future.
Gold to Silver Ratio – another chart
While we’ve spoken about the extremely bullish opportunities for silver, especially the 50-year silver chart, we’ll focus solely on the gold-silver ratio in this article.
One of the few messages on X on this subject comes from Willem M.:
The gold-silver ratio is heralding the start of a significant rally in precious metals-related stocks, just like in 2010, 2016 and 2020. It’s one of our favorite indicators. pic.twitter.com/NSLg8VR1lo
— Willem Middelkoop (@wmiddelkoop) October 22, 2024
He rightly pointed out yesterday that this ratio chart is testing epic levels.
We completely agree: our analysis shown above is consistent with his findings.
What we would add to his graph is that silver requires a little push higher although for the probability will increase exponentially that we have a 2010, 2016 or 2020 style silver rally.
Gold-Silver Ratio – What Now?
As explained in this short but pithy article, silver needs to move a little higher.
For example, a gold-silver ratio breakdown below 75 points can occur when:
- Spot silver moves to USD 37/oz, up 7%.
- Spot gold remains flat around 2720 USD/oz.
In this scenario, the ratio drops to 74 points, which would coincide with the start of an epic collapse.
The expected result would be that silver would make a rapid run, probably to 42 and/or even 49 USD/oz.
While we don’t predict this to happen in the near term, we can’t rule it out once the gold-silver ratio collapses and gives up the 75 points.
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