What is the gold to silver ratio telling us about silver’s prospects?

By Stuart Fieldhouse
23rd September 2025

Related topics: Silver

What is the gold to silver ratio telling us about silver’s prospects?

Silver is often thought of as gold’s less glamorous cousin, forever overshadowed by bullion’s role as a store of value. Yet the metal has long played a central role in global finance and industry alike.

Half of global demand today comes not from investors or jewellers but from factories: silver is vital to electronics, solar panels and even car components. Its hybrid role, as both an industrial commodity and a monetary metal, makes it unusually sensitive to economic cycles. And, unlike gold, which is mined mostly in dedicated projects, most silver is extracted as a byproduct of zinc and gold mining.

Are we mining enough silver to meet demand?

Primary silver mines, responsible for under 30% of world output, remain the only dedicated operators. Global silver mine production in 2024 rose by just under 1% to 819.7m ounces, lifted by higher output from lead and zinc projects in Australia and the resumption of operations at Newmont’s Peñasquito mine in Mexico.

Gains from Bolivia and the United States added to the total. Chile, once a steady supplier, saw production fall by 8.8m ounces. Production tied to gold mining surged by 12% to a three-year high of 13.9m ounces, while output from lead and zinc mines stagnated.

Beginners Guide to Commodities

Mexico continues to lead the pack, followed by China, Peru, Bolivia and Chile. Australia’s silver production jumped 19% year-on-year, reaching about 38m ounces. This patchwork of supply, spread across multiple mining sectors, contributes to silver’s quirky market dynamics: it is both abundant and scarce, subject to investment manias and industrial demand shocks alike.

The Hunt Brothers and the silver market

One mania still looms large. In the 1970s, the Hunt brothers, wealthy Texas oilmen, began stockpiling silver at around $2 an ounce. By early 1979 the price had tripled, and at their peak the Hunts controlled roughly 195m ounces, about a third of the world’s deliverable supply. Prices soared to nearly $50 an ounce in January 1980. But the boom collapsed as exchanges tightened margin requirements and regulators intervened. The Hunts went bankrupt, leaving behind one of the most notorious tales of market manipulation.

The gold to silver ratio

For more sober investors, the relationship between silver and gold remains a guide. The gold-silver ratio — how many ounces of silver equal the price of one ounce of gold — has been tracked for centuries. Rome fixed it at 12:1. America’s Coinage Act of 1792 pegged it at 15:1. Today it floats freely, reflecting shifts in industrial demand, investment appetite and macroeconomic forces. Extremes are rare: above 100:1, silver looks cheap; below 35:1, expensive. Timing such extremes can prove lucrative.

In May 2025 the ratio peaked at nearly 104:1, before falling back as gold surged on geopolitical fears and shifting monetary policy. At present it hovers near 85:1, well above historic averages. Technical analysts suggest a drift towards 79:1, implying that silver could outpace gold by about 8%. If gold prices remain steady, that projects silver towards $46.50 an ounce. In Australian dollars, silver already trades at record highs of A$65.40.

The long-term charts offer more food for thought. The ratio sits on its 200-week moving average, a level last tested in 2021. Then it sank to 60:1. A decade earlier, in 2011, when silver reached its modern high of $50, the ratio briefly dipped to 30:1, levels last seen during the Hunt brothers’ squeeze.

Silver’s industrial utility is growing

What might push it lower again? Unlike gold, silver’s industrial utility is only growing. Solar panels, electric vehicles and electronics each demand ever more of the metal. Even if mine supply expands, structural demand from green technologies could underpin prices.

For investors, the lesson is that silver is both a hedge and a gamble. Its history shows bouts of mania, crashes and long slumbers. Its present suggests growing industrial relevance. And its ratio with gold, hovering near extremes, invites speculation that the grey metal’s time in the sun may not be over.