Gold–Silver Ratio Rebounds Sharply After Silver Price Crash: What It Means for Investors
The gold–silver ratio, a key indicator used to track the relative valuation of precious metals, has rebounded sharply after briefly touching unusually low levels. The ratio fell to 46 on Thursday before jumping back to 57, following a steep reversal in silver prices. Market analysts have long cautioned that a gold–silver ratio below 50 often signals that silver is no longer cheap and may be vulnerable to sharp corrections.
Silver’s Rally Outpaces Gold — But Volatility Remains High
Over the past year, gold prices have surged nearly 73%, but this gain has been overshadowed by silver’s explosive 171% rally, despite a recent pullback. Silver prices cracked nearly 27% on Friday, falling to around $84 per ounce, while gold dropped about 9% to hover near $4,865.
The sell-off was triggered by heightened market volatility after US President Donald Trump nominated Kevin Warsh as the next chair of the US Federal Reserve, a move that spooked global investors and prompted profit-booking across asset classes.
Silver’s Volatility Signals Risk of Sharp Corrections
According to data cited by The Conversation, silver’s strong performance came with significantly higher risk. Silver recorded 36% annualised volatility, nearly double gold’s 20% volatility over the same period. This highlights a familiar market pattern: assets that rise rapidly can also fall just as quickly.
The gold–silver ratio mirrored this risk. After compressing to 46, it rebounded sharply as silver prices corrected. Analysts note that such movements often precede periods of consolidation or further downside in silver.
What Is the Gold–Silver Ratio?
The gold–silver ratio is calculated by dividing the price of one ounce of gold by the price of one ounce of silver. It shows how many ounces of silver are required to buy one ounce of gold.
A high ratio suggests gold may be overvalued relative to silver
A low ratio indicates silver may be relatively expensive
Investors often use this metric during volatile markets to assess which metal may offer better relative value.
Ratio Still Below Long-Term Average
Despite the recent rebound, the gold–silver ratio remains well below its 10-year average of around 80:1.
A report by WhiteOak Capital Mutual Fund noted that when the ratio drops below 50:1, silver typically loses its valuation comfort. Historically, such levels have been followed by faster and deeper corrections in silver prices compared with gold — a trend already visible in recent sessions.
Experts Flag Caution on Silver
Harshal Dasani, Business Head at INVasset PMS, said sub-50 levels in the gold–silver ratio are usually seen during phases of extreme silver outperformance, such as in 2011. While this does not mean silver is expensive in absolute terms, it does suggest that much of the relative re-rating may already be priced in.
Silver’s higher volatility also means that once the ratio compresses sharply, further gains tend to be uneven, with sharper drawdowns becoming more frequent, Dasani added.
Should Investors Brace for More Pain?
WhiteOak Capital highlighted that when both gold and silver rise together, it often reflects macroeconomic stress, geopolitical tensions, or currency risks. However, when silver significantly outperforms gold with parabolic moves, it may signal the final speculative phase of a rally — one that historically ends unfavourably for investors.
From an asset-allocation perspective, Dasani advised portfolio discipline rather than aggressive positioning. Trimming some silver exposure and reallocating toward gold could help stabilise portfolios, as gold typically performs better during risk-off phases.
“The broader precious metals theme remains intact, but the risk–reward balance has become more even, calling for calibration rather than aggression,” he said.
Silver Outlook Remains Cautious
Offering a bearish outlook, Amit Goel of Pace 360 warned that silver prices could face continued weakness. He expects silver to fall toward $50 per ounce (around ₹2 lakh) by June 2026, citing heightened volatility and stretched valuations.
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