What is Gold Silver Ratio? What current levels signify?

Gold silver ratio is a metric widely used in the commodities market. This is as the ratio tells about the strength of gold in comparison to silver or simply speaking an outlook on which precious metal will perform going ahead.

The formula t’s a simple calculation that shows how many multiples gold is trading relative to the price of silver.

How gold/silver ratio is computed?

For knowingl, gold-silver ratio you need to divide the current gold price by the current silver price and in a case if it is on the lower side then silver may outperform the precious yellow-metal gold.

What is the ideal or good gold-silver ratio?

The typical range of gold to silver is between 50 and 70, and in case it is near 80 levels, there is an indication to buy the silver metal.

Gold/silver ratio trend currently and what it signals

Currently, the gold/silver ratio is trending down, signalling optimism for silver and its likely outperformance going ahead. Ajay Kedia- Director- Kedia Advisory mentions that in case the gold'silver ratio takes a drop then silver outperforms.

Also this is imminent as the central banks globally are resorting to rate cut and also the demand for silver amid boom in the clean energy space has been gaining traction.

Furthermore, boosting fundamentals for silver, both China and India are importing silver in good quantum. Another, significant usage has been in the solar panel domain for the white metal.

So given the strength depicted by silver, Kedia sees silver hitting Rs 94,000- Rs 95,000 levels by 2024 end. This is a nearly 5 per cent upside for the metal considering its closing price at Rs 90,630 per kg in the previous session on the MCX.

Interesting, the white metal has tumbled from the peak of 1,00,289 levels to Rs 90,630- down nearly Rs 9,660 per kg or nearly 10 per cent.