Gold – Silver Ratio Crashes to Lowest Level Since 1983

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11Apr/110

Gold – Silver Ratio Crashes to Lowest Level Since 1983

ST. LOUIS (MineFund.com) -- Investors concerned about silver overheating have more reason to worry with the gold-silver ratio plunging to a monthly average of 37:1 so far this April. That makes silver the most expensive relative to gold since September 1983. Silver remains relatively cheap in the modern era though when considering annual average rather than monthly prices.

Silver is also appreciating rapidly against palladium with all-time new lows coming month-after-month. The metal has also surged against general equities with the best showing since 1988 against the Dow Jones Industrial Average and the S&P 500. See all the ratios here.

If silver continues to appreciate or at least hold its ground this year, it will be the first annual average price - adjusted for inflation - exceeding $30 per ounce since 1980. In that year it averaged more than $43/oz, but 1979 was the record annual average at $67.90/oz. The peak monthly average came in January 1980 when silver traded at nearly $109/oz.

The next significant technical hurdle for silver will be an annual average real price of $40/oz which, prior to the 1979 bubble, was last recorded in 1864 as America’s Civil War was drawing to a close.

MineFund’s World Silver Price Indices show that the metal’s gains are coming primarily from weakness in the US dollar.

When priced in weighted baskets of various currencies, silver is performing well, but does not appear nearly as overbought. In commodity prices silver has only just reached half the monthly average value of the all-time peak. When priced in the leading currencies silver must still rise three-fold to reach it’s all time high.