Gold and Silver Investing: Is Silver Playing Catch-Up to Gold?

Joey Chung/Shutterstock

During tumultuous financial periods when the market is anything but certain, investors flock to the precious metals market as a safe, low-risk option for diversifying their portfolios. Specifically, seasoned investors and hard-asset enthusiasts pay close attention to the gold-silver ratio, which dictates the market strategy of many business owners and entrepreneurs.

Many investors closely monitor this ratio to determine how they wish to diversify the amount of precious metal in their portfolios. As the demand for silver remains constant and financial circumstances shift the market landscape rapidly, is silver playing catch-up to gold?

The Gold and Silver Price Ratio

The gold-silver ratio generally refers to how many ounces of silver it takes to purchase one ounce of gold. The use and practicality of this ratio are highly contentious, especially given how often it fluctuates. Historically, governments established a fixed ratio to maintain monetary stability, but the 20th Century saw the end of this era and the rejection of the gold standard by the United States.