Thursday, 28 February 2013

Gold vs Silver Historical Price Gap

Silver has historically been viewed as the poor man's gold.  Its an interesting topic because for all the reasons why gold is supposed to be a good investment, such as limited amounts and easily denominated and recognized as a currency, those all can apply to gold as well.  Even the Bank of England at one point had a silver standard too. has this inflation adjusted chart of gold and silver prices and you'll notice that while silver has always been lower than gold in almost all timeframes, the gap has changed significantly.

Back in most of the 80s, the gap was approx $800 to $10, dropping to $350 vs $10 or so at the turn of the millennium.  Today, gold has risen to $1600 while silver has risen to only $30.

However the comparison isn't that simple because you can look at it as either gold should be a absolute price gap (i.e. always $600 higher) or a multiple (i.e. always 40-80x silver).  Its not clear to me what is more relevant but the chart below does show that the gap between gold and silver is at historic levels and hasn't been even close to this big except for maybe a short timeframe in the late 70s.  

As a little bonus, here is the chart including platinum and palladium in an inflation adjusted price from (though the chart itself is a bit poorly done from a readability standpoint).

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