Once you’ve made the decision to invest in physical precious metals, it can become challenging identifying which product may provide you the greatest return on your investment capital. A simplistic yet very effective approach to help you select the most profitable time to both buy and sell is the Gold and Silver ratio. How many silver troy ounces (ozt) can be purchased for the price of a gold troy ounce.
Traditionally this ratio has averaged around 40-55 silver ozt for each gold ozt. Over the last 3 year, however, Silver has suffered a far more severe price setback compared to gold. This has sent the Gold Silver ratio up to around 70-85 ozt of silver per ozt of gold. This physical price setback of silver from the 2011 highs in USD to the most recent low towards the end of 2015, has been close to a 70% fall, compared to gold at nearly 40%. Using the Gold and Silver ratio is a very effective tool in deciding whether Gold or Silver presents the best value for your investment. But is Silver the only precious metal that is trading at price extremes when compared to Gold?
Even Platinum compared to Gold has experienced a sell off, at one point nearly 1.35 ozt of Platinum could be purchased for the same price as 1 ozt of Gold! Like Silver and Gold, in Australia, Platinum is also classified as an investment precious metal and can be purchased in Australia for Self Managed Superannuation Funds, and is not currently subject to Australian GST.
One thing is certain – prices in all metals are well off their 2011 highs presenting very profitable opportunities for those investing in precious metals now with a long-term view to the future. Identifying where price extremes exist in precious metals, however, is the key to determining how to best allocate your investment funds for maximum capital return. For that reason – always keep the Gold / Silver and Gold / Platinum ratios as a point of reference when making decisions.