Should you buy silver in 2022

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Earlier we said that generally silver prices follow gold prices.

This means that if the price of gold goes up, silver usually does too.

But gold is MUCH more expensive than silver. Sometimes much more expensive. (Gold is much rarer.)

A ratio of gold to silver explains this.

Think about the gold money ratio as how many ounces of silver it takes to buy one ounce of gold.

Over the past 20 years, the ratio has averaged around 60: it would take 60 ounces of silver to buy one ounce of gold.

Under this ratio, if the price of gold is $1,200 an ounce, then silver is about 1/60th of that…$20 an ounce.

But when the pandemic first hit the world – and global media – in March 2020, the The ratio broke all previous records, reaching 120. This made gold extremely “expensive” and silver “cheap”.

There are ways to play the ratio to benefit your bottom line. Here is an example :

When sovereign man was a brand new company in 2009, silver was worth $13 an ounce.

A key indicator – the gold-silver ratio – told us that an investment in silver could pay off fairly quickly.

Silver was trading at a ratio of over 70:1 to gold, meaning over 70 ounces of silver was worth 1 ounce of gold. If silver was worth $13, gold was worth about $910 an ounce ($13 * 70).

Another way of thinking: if you had 100 ounces of silver, you could only buy one ounce of gold. You wouldn’t have enough for two.

At that time, a ratio of 70 was considered quite “expensive”: throughout the 20th century, the ratio historically hovered around 50. An ounce of gold was generally worth 50 times an ounce of silver.

If you had 100 ounces of silver, then under this ratio you could buy two ounces of gold.

And in ancient times the ratio was closer to 15. You would be able to buy six ounces of gold with your 100 ounces of silver.

The 70:1 ratio in 2009 didn’t make much sense to us. The panic of the global financial crisis had prompted many investors to buy gold, but silver was largely ignored.

So we suggested to our readers that the money was a reasonable long-term bet.

In a July 7, 2009 article by Simon Black, Sovereign Mans founder, suggested readers consider a long-term futures contract that would lock the price of silver for two years at just $13.

And sure enough, within two years, the gold/silver ratio reversed to just 35:1, and the price of silver hit an all-time high of around $50 an ounce.

Now, no financial investment should rise or fall in a straight line, and we were concerned that the price of silver had risen too quickly.

So, hours after silver peaked, we sent out a note to our readers suggesting that silver might be at the top, and essentially locking in a near 300% gain.

Silver then spent the next few years in the doldrums…until 2020.

In March 2020, the gold/silver ratio reached a record high of 120:1 and the price of silver fell below $12 per ounce.

Once again we have alerted readers to the mismatch between gold and silver prices. And again, the ratio corrected itself.

By mid-January 2021, the price of silver had risen to $25.14 per ounce, a 118% increase since March.

And the silver-gold ratio is now around 74:1.


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