Thursday, May 30, 2024

Gold Silver Ratio: Why Silver Is performing poorly?

Gold Silver Ratio: Why Silver Is performing poorly?

The gold silver ratio is a way of measuring the number of silver ounces needed to acquire one ounce of gold. It is one of the subjects that gold investors are always interested in, because it has stayed at 100 points for a while now; far above the historical average. Market analysts say that there are real reasons why gold has outperformed silver in the last decades. Currently, 1 ounce of gold is equivalent to 109 ounces of silver.

The gold silver ratio: why has silver lost ground against gold?

The very first reason is the significant difference between gold and silver. Gold is a safe haven metal which individuals and central banks alike use to hedge against inflation. On the other hand, the demand for silver has decreased as a result of the global recession that followed the outbreak of the Covid-19 pandemic. Although silver is considered a precious metal, it is very expensive. One of the things that have impacted on the demand of silver is the development of digital photography. Two decades ago, the world needed 266 million ounces of silver to develop photographs, which was almost a quarter of the total production of the precious metal. As of now, its use in photography has dropped to just about 53 million ounces. Therefore, the decline in traditional photography has greatly affected the gold silver ratio and this explains the metals decline.

Gold, on the other hand has thrived on monetary policies

The reason why gold has outperformed silver can be attributed to the monetary policies of the different countries across the world. The biggest of all the factors has been the rise in interest rates. As the interest rates have remained steady, low gold demand by the central banks has also impacted on the gold silver ratio. Although the central banks are expected to remain net buyers of gold in the future, their demand for the precious metal will remain significantly lower. What is your view about this subject? If you want more information about buying gold from Africa, feel free to contact us now.

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