One buying opportunity during this ongoing crisis could be silver. Silver is always hard to read because it is both an industrial metal and a historical store of monetary value.
Silver has sold off very sharply during the downturn, from roughly $18/oz. at the end of February to just $12/oz. That’s a 33% decline in less than a month. Meanwhile, gold has also dropped but it’s only lost about 10% over the same period. That brings the Gold/Silver Ratio (the amount of Silver you have to buy to match the value of 1 ounce of Gold) to about 122.
The actual ratio of physical silver to physical gold in the earth is estimated to be 18.75. For thousands of years, the fixed relationship between these two metals for monetary exchange was in a range of 12 to 16. Even in modern times, and especially since gold standards were abandoned, the typical ratio has been between 40 and 70. So, this ratio is in uncharted territory right now.
Of course, gold could come down to close the gap but in the current market condition and scenario, the ratio is far more likely to be improved by a rebound in silver prices. Silver looks like a long-term buy right now.
Sven Franssen