Silver/Gold Ratio is Oversold, But There’s More To the Story

The Silver/Gold ratio is oversold, but silver is not “undervalued” relative to gold based merely on price

A common hue and cry from Team Silver Bug is that silver is extremely undervalued relative to its big brother in metallic monetary arms. It has to be, because its price is so cheap as measured in gold!

Not true. Silver’s price relative to gold is what the market and history – save for a few distinct upside explosions in silver and the Silver/Gold ratio – say it is. These dramatic upside events have largely been driven by macro considerations, not silver seeking out its true value before being pounded back down by some elaborate conspiracy.