How Does Gold To Silver Ratio Work? CoinBazaar India

Gold To Silver Ratio:

Gold:Silver ratio is basically an indicator which helps you in deciding when to Buy/Sell Gold/Silver or when to trade one metal for the other.

How to calculate Ratio?

Spot Price of Gold ÷ Spot Price Of Silver = Gold:Silver Ratio

Gold/Silver Ratio Charts by Kitco has made it easier for everyone to access the ratio instead of calculating it manually. But, if you wish to calculate it manually then you can find spot pricing of metals by: Clicking Here

What does Gold To Silver Ratio denote?

It tells us how many ounces of Silver it will take to buy 1 Ounce of Gold. In India we do not really focus on the ounce system but it is still an essential indicator which should be followed by everyone worldwide. 

As per historical average the ratio has been 40-45 is to 1

Let us now check what the ratio is for 10th October 2019

How does Gold To Silver Ratio help us in deciding when to buy which metal?

From the above two images we can see the Gold:Silver ratio has jumped from an average of 42.5:1 to 85:1.

This indicates that you would need 85 ounces (2.6 Kilogram) Silver to buy 1 Ounce (31.10 Grams) Gold. So the question remains what should you be buying at this level? It is easily understood that you should be buying Silver at this stage because it is undervalued, if the ratio was to drop back to the median then you would be able to get more Gold for the silver you had invested in. Generally speaking, if the ratio stays over 80 it is highly suggested to go for silver and if it drops below 80 then Gold is a better option, either selling the metal or trading for the other. 

Even though the ratio is just an indicator but volatility could switch sides at any moment, basic instinct of an individual is to be considered while buying/selling because the purpose of an investment varies from person to person.

We at CoinBazaar recommend diversifying in both Gold & Silver at all times to create a balance, the ratio is important but diversification if more important. 

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