Wednesday, April 27, 2011

Do we buy Gold or Silver now?

There is a very famous measure of finding out how expensive Gold and Silver as compared to each other. The Mean is about 50 whereas during extreme times it oscillates between 20 and 80.

What we mean here is how many ounces of silver, 1 ounce of gold will buy. Right now ratio is 33.

If we take price of silver to stabilize at 45 dollars an ounce, then gold should trade at 2250 dollars an ounce.

Conversely, Silver should drop to 31 dollars an ounce to meet its equality historically.

So, what is the conclusion?

We dont know if Silver will rise or fall. But, it clearly implies Gold is a much safer bet compared to Silver.

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