Short answer: the gold silver ratio is the gold price per ounce divided by the silver price per ounce. A reading of 80 means one ounce of gold buys 80 ounces of silver. Traders use it as a relative-value gauge for the two precious metals. A stubbornly high reading marks silver as the cheaper metal of the two; a low reading marks gold as cheaper. It is a slow, blunt signal that works best for sizing a pair trade, not for timing entries to the minute.
This page is for CFD traders on XAUUSD and XAGUSD who want to know whether the ratio belongs in their market analysis.
What the gold silver ratio measures and how to calculate it
The arithmetic is humble. Take the gold price, divide by the silver price, and you have the ratio. With gold at $2,000 and silver at $25, the ratio is 80. If silver rallies to $32 while gold stays flat, the ratio drops to 62.5. If both metals fall but silver falls harder, the ratio rises even though the whole sector is losing value. The ratio describes relative performance, never direction.
You do not need a special feed. Benchmark prices for both metals sit on the LBMA precious metal prices page, which lists reference prices for gold, silver, platinum and palladium. On a CFD platform the XAUUSD and XAGUSD quotes give you a live version of the same figure, with spread baked in.
Why care? Gold and silver share most of their drivers but not all of them. Silver carries a large industrial demand component, which gold scarcely has. When shared and separate drivers pull in different directions, the ratio moves, and that movement is tradable.
Historical trends: where the ratio has been
For most of recorded history the ratio was fixed by governments, not markets. Ancient and medieval mints set it near 12 to 1. The United States Coinage Act of 1792 set it at 15 to 1. Those fixed ratios collapsed once silver was demonetised and the metals began to float. The free-floating era is far more lumpy. The table gives round-number reference points; exact prints vary by data source.
| Period | Approximate ratio | What was happening |
|---|---|---|
| 1792 (fixed by law) | 15 | US coinage pegged both metals |
| Early 1980 | Under 20 | Silver spiked near $50 during a cornering attempt |
| Early 1990s | Around 100 | Silver stuck in a long bear market while gold held up |
| 2011 | Low 30s | Silver revisited $50 as gold set new records |
| March 2020 | Above 120 | Silver sold off violently in the liquidity crunch |
Two things stand out in this historical data. First, the floating-era average sits somewhere in the 50s to 60s. Readings in the 80s or 90s are high but seldom extreme on their own. Second, the ratio may stay stretched for years. A trader who shorted the ratio at 80 in the early 1990s waited about six years for the mean to arrive.
What moves the ratio: market conditions and geopolitical events
The ratio changes whenever one metal reacts more than the other. The main cases:
- Industrial cycles. A manufacturing slowdown hits silver demand and leaves gold mostly untouched, so the ratio rises.
- Risk-off shocks. In a disorderly selloff, silver trades like a jittery industrial commodity while gold catches safe-haven flows.
- Geopolitical events. Conflict and sanctions tend to lift gold first and silver later, which pushes the ratio up before it mean-reverts.
- Monetary policy. Falling real rates lift both metals, but silver usually moves by a larger percentage, which compresses the ratio.
- Retail enthusiasm. Silver's lower price per ounce gives it an attractiveness to small buyers, and crowded retail buying has driven sharp ratio declines.
- Supply. Mine output and above-ground stockpiles respond sluggishly, so demand shifts show up in price fluctuations rather than in volume.
A practical takeaway: when gold sits at a record and silver lags, the move is fear-driven rather than growth-driven. When silver leads, growth or inflation expectations are usually doing the work. Our guide on how to trade silver covers the metal's own drivers in more depth.
A ratio strategy for CFD traders, with a worked example
Investment strategies built on the ratio come in two forms. Long-only investors rotate between metals: hold silver when the ratio is high, hold gold when it is low. CFD traders can do something tidier: a dollar-neutral pair trade.
Suppose gold is $2,000 and silver is $25, so the ratio is 80, and you expect it to drift toward 70. You buy 800 ounces of silver CFDs ($20,000 notional) and sell 10 ounces of gold CFDs ($20,000 notional). Now the direction of precious metals as a group matters far less than the ratio.
| Scenario | Gold | Silver | New ratio | Silver leg | Gold leg | Net |
|---|---|---|---|---|---|---|
| Silver catches up, gold flat | 2,000 | 28 | 71.4 | +2,400 | 0 | +2,400 |
| Both fall, silver holds better | 1,800 | 24 | 75.0 | -800 | +2,000 | +1,200 |
| Gold runs, silver stalls | 2,200 | 26 | 84.6 | +800 | -2,000 | -1,200 |
The third row is the honest one. A pair trade is not safe just because it is hedged. It loses whenever the ratio rises, full stop.
A short checklist before placing the trade:
- Define the ratio level that proves you wrong, for example a close above 88. Size both legs so that level costs no more than 1% of equity.
- Match notional, not ounces. Equal ounce counts give a lopsided position tilted heavily toward gold.
- Price the cost. Two legs means two spreads and two overnight financing charges, and ratio moves take weeks, so carry matters here.
- Decide the holding period in advance. A ratio thesis that needs six months does not belong on a 15-minute chart.
Risks and common mistakes with ratio trades
- Treating the ratio as a timing tool. It flags value, not turning points. A ratio of 90 can become 100 before it becomes 70.
- Ignoring the volatility gap. Silver's daily range is roughly twice gold's in percentage terms, so the silver leg dominates the swings even in a matched-notional pair.
- Quoting a stale average. The pre-float ratios of 15 or 16 have no bearing on a market where silver is mostly an industrial input.
- Running a pair thesis with scalping habits. A gold scalping strategy works in minutes and lives on spread control, while a ratio position works in months and lives on patience.
- Letting ambiguity creep into the exit. If the ratio reaches your target but the silver leg is losing because gold collapsed, you still close. The thesis was the ratio, not silver.
Ratio trades inside a prop-firm evaluation
A pair trade uses two margin slots, pays two sets of spread, and moves slowly. Under evaluation rules that has consequences. Because the silver leg is twice as volatile, a bad day in silver can breach the daily loss limit even if the ratio thesis is intact. Size the whole pair from the daily limit, not from the account balance. For sizing a single metals leg under those limits, see the walkthrough on gold position sizing under a funded account.
Total drawdown is the second concern. A ratio position that drifts the wrong way for three weeks eats quietly into a fixed drawdown buffer. Pivex suits a slow ratio thesis better than many rule sets. The evaluation is a single step, there is no deadline to finish it, and no required number of trading days. Positions can stay open over the weekend, and the total drawdown line stays where it started rather than trailing equity higher. The daily loss cap starts fresh each morning, which is the number a pair trader should watch most closely. Gold and silver trade as CFDs on Match-Trader alongside forex, indices and major cryptocoins.
Next step: calculate the ratio from the two benchmark prices, mark where it sits against the floating-era range, and build one matched-notional pair trade on paper. If you then want to run it under a rule set, Pivex sets out its daily and total loss limits in advance and allows multi-week holds. The plan transfers without surprises.
Related guides: how to trade silver and gold scalping strategy.
Before participating, review Pivex's current program rules and decide whether a simulated proprietary trading evaluation fits your experience and risk limits. Participation does not guarantee a reward, income, or any particular trading result.