Gold vs Silver: A Simple Guide for Everyday Investors

Ever wondered whether you should buy gold or silver? There's actually a simple trick that can help you decide, and it doesn't require a finance degree to understand.

The Magic Number: Gold-to-Silver Ratio

Think of this ratio as a comparison tool. It simply tells you how many silver coins you'd need to trade for one gold coin.

Here's how it works: If gold costs R61 317 per ounce and silver costs R717 per ounce, you divide gold by silver:

R61 317÷ R717 ≈ 85.5

This means you'd need 85.5 ounces of silver to equal the value of 1 ounce of gold. We call this an "85.5-to-1 ratio."

Why This Matters to You

This ratio acts like a bargain detector. When the number gets really high, silver might be a better deal. When it's low, gold might be the smarter choice.

Think of it like this:

• High ratio (80 or higher) = Silver is on sale compared to gold

• Low ratio (40 or lower) = Gold is the better value

Right now, the ratio is unusually high, which suggests silver might offer better potential returns than gold in the coming months.

A Quick History Lesson

This ratio hasn't always been the same:

• Ancient times: About 15 silver coins equalled 1 gold coin

• Most of the 1900s: Usually between 40-60 to 1

• 2020 crisis: Shot up to over 120 to 1 (a record high!)

• Today: Hovering around 70-90 to 1

When the ratio gets extreme (very high or very low), it usually swings back toward the middle eventually.

How Regular Investors Use This

Timing Your Purchases Instead of guessing, you can use the ratio to decide when to buy. When silver looks cheap compared to gold, consider buying more silver. When gold looks cheap, lean toward gold.

Building Your Collection Rather than putting all your money into just gold or just silver, you can split your precious metals purchases based on which offers better value at the time.

Protecting Against Inflation Since silver is much cheaper per ounce than gold, it's easier for smaller investors to get started. You can buy meaningful amounts without breaking the bank.

Real Example: When the ratio hit 100-to-1, some smart investors sold some of their gold and bought silver instead, betting that silver would eventually catch up.

The Bottom Line

The gold-to-silver ratio is like a compass for precious metals investing. It points you toward the better deal at any given time.

Instead of randomly choosing between gold and silver, ask yourself: "Based on history, which metal offers better potential right now?"

What You Should Do Next

Start watching this ratio if you're interested in precious metals. Check it monthly to see if there are any major changes that might signal a good buying opportunity.

The ratio changes constantly based on world events, economic conditions, and investor emotions. By understanding this simple concept, you're already ahead of many investors who just guess or follow the crowd.

Remember: This isn't about getting rich quick. It's about making smarter, more informed decisions when building your precious metals collection over time.

Want to stay updated on when the ratio signals good buying opportunities? We'll be sharing monthly updates to help you time your purchases better.