Silver is significantly undervalued right now. One analyst called the current price in the $22 an ounce range “inexcusably low.”
But many analysts are bullish on silver in the medium term with projections of prices climbing to $50 to $100 an ounce over the next two to five years.
The question is when will we finally start to see this correction?
Silver has languished in 2023. While gold is up over 4% on the year, the price of silver has declined by over 5%.
We can see the growing spread between silver and gold in the silver-gold ratio, currently running at over 84-1. That means it takes over 84 ounces of silver to buy one ounce of gold. To put the current ratio into perspective, the average in the modern era has been between 40:1 and 50:1.
Historically, the ratio has always returned to that mean. And when it does, it does it with a vengeance. The ratio fell to 30-1 in 2011 and below 20-1 in 1979.
When the spread gets this wide, silver doesn’t just outperform gold, it goes on a massive run in a short period of time. Since January 2000, this has happened four times. As this chart shows, the snapback is swift and strong.