Gold Ratios Every Precious Metals Investor Should Track
Gold ratios are some of the most powerful analytical tools available to precious metals investors. By comparing the price of gold against other assets, commodities, and indices, these ratios reveal whether gold is overvalued, undervalued, or fairly priced in relative terms. Experienced investors use gold ratios to time purchases, optimize allocation between metals, and identify macro trends that may not be visible from the gold spot price alone. In this guide, we break down the most important gold ratios, explain what they tell you, and show you how to use them for smarter investment decisions.
The Gold-to-Silver Ratio
The gold-to-silver ratio is the most widely followed precious metals ratio and the most directly actionable for investors who hold both metals. It is calculated by dividing the current gold price by the current silver price.
For example, if gold is trading at $5,000 per ounce and silver is at $50 per ounce, the gold-to-silver ratio is 100:1. This means it takes 100 ounces of silver to buy one ounce of gold.
Historical Context
The gold-to-silver ratio has varied dramatically throughout history. During the Roman Empire, the ratio was fixed at approximately 12:1. In the 20th century, it has averaged around 50:1 to 60:1. In modern markets, the ratio has swung from a low of about 15:1 in early 1980 to a high of over 120:1 in March 2020 during the initial COVID-19 panic.
How to Use This Ratio
The gold-to-silver ratio helps investors decide how to allocate between the two metals:
- High ratio (above 80:1): Silver is historically cheap relative to gold. This may be a signal to favor silver purchases or swap some gold for silver, as the ratio tends to revert toward historical norms.
- Low ratio (below 50:1): Silver is relatively expensive compared to gold. This may signal an opportunity to favor gold purchases or swap silver for gold.
- Neutral range (50:1 to 75:1): Both metals are in a normal relative range. Allocation decisions should be based on other factors.
For a deeper analysis of when to favor each metal, see our guide on gold vs. silver as an investment.
The Gold-to-Platinum Ratio
The gold-to-platinum ratio compares the prices of gold and platinum. Historically, platinum has traded at a premium to gold due to its rarity and industrial demand. However, since 2015, gold has consistently traded above platinum, representing a significant historical anomaly.
Historical Context
For most of the 20th and early 21st century, platinum was more expensive than gold, with the ratio below 1.0. As recently as 2008, platinum traded at nearly double the gold price. Since then, the relationship has inverted, with the gold-to-platinum ratio rising above 2.0 and sometimes exceeding 2.5. This shift reflects both strong gold investment demand and weakening platinum industrial demand as the automotive industry transitions away from diesel engines.
How to Use This Ratio
- High ratio (above 2.0): Platinum is historically cheap relative to gold. Investors looking for value within the precious metals complex may consider adding platinum exposure.
- Low ratio (below 1.0): Platinum is expensive relative to gold, suggesting gold may offer better value.
Track the current relationship between gold and platinum on our live spot prices page and read our platinum market outlook for current analysis.
The Gold-to-Dow Ratio
The gold-to-Dow ratio divides the Dow Jones Industrial Average by the price of one ounce of gold. This ratio measures the relative performance of financial assets (represented by stocks) versus real assets (represented by gold). It is one of the most important long-term valuation metrics for determining whether to favor stocks or gold in your portfolio.
Historical Context
The gold-to-Dow ratio has exhibited dramatic cycles over the past century:
- 1929: The ratio peaked at approximately 18:1 before the Great Depression
- 1932-1933: The ratio fell to about 2:1 during the Depression
- 1966: The ratio peaked at approximately 28:1
- 1980: The ratio fell to approximately 1:1, meaning one ounce of gold could buy the entire Dow
- 1999-2000: The ratio peaked at approximately 43:1 during the dot-com bubble
- 2011: The ratio fell to approximately 6:1
How to Use This Ratio
A declining gold-to-Dow ratio means gold is outperforming stocks, suggesting that gold should be overweighted in your portfolio. A rising ratio means stocks are outperforming gold. Extreme readings historically signal major turning points between paper and hard asset cycles. When the ratio reaches single digits, gold is outperforming dramatically. When it exceeds 20 or more, stocks are in a strong secular bull market relative to gold.
The Gold-to-Oil Ratio
The gold-to-oil ratio divides the price of gold by the price of a barrel of West Texas Intermediate (WTI) crude oil. Since both are dollar-denominated commodities, this ratio strips out currency effects and provides insight into the relative value of two of the world's most important hard assets.
Historical Context
The long-term average gold-to-oil ratio is approximately 15:1, meaning one ounce of gold typically buys about 15 barrels of oil. The ratio has ranged from a low of about 6:1 (when oil was expensive relative to gold) to a high of over 40:1 (when oil was cheap relative to gold, such as during the 2020 oil price crash).
How to Use This Ratio
- High ratio (above 25:1): Oil is historically cheap relative to gold, which may signal energy sector value or an economic slowdown.
- Low ratio (below 10:1): Oil is expensive relative to gold, which often correlates with inflationary pressure and may support further gold price increases.
The gold-to-oil ratio also serves as a broad economic indicator. When gold dramatically outperforms oil, it often signals recessionary conditions, as gold rises on safe-haven demand while oil falls on weakening economic activity.
The Gold-to-Real Estate Ratio
The gold-to-real estate ratio compares the price of gold to the median home price in the United States. While less precise than other ratios (because real estate is highly local), this metric provides a broad view of whether gold or real estate is the better store of value at any given time.
Historical Context
In 1980, at the peak of the gold bull market, the median U.S. home price was approximately $47,000 and gold was $850 per ounce, meaning it took roughly 55 ounces of gold to buy a median home. By 2000, the median home price had risen to around $130,000 while gold languished at $280, requiring about 464 ounces of gold to buy the same home. In recent years, with gold above $5,000 and median home prices around $400,000, the ratio has compressed to approximately 80 ounces, making gold significantly more competitive as a store of value compared to the early 2000s.
How to Use This Ratio
This ratio is most useful as a generational indicator. When it takes fewer ounces of gold to buy a home, gold has been outperforming real estate. When it takes more ounces, real estate has been the stronger performer. Investors can use this metric to decide how to allocate between hard assets, particularly in an inflationary environment where both gold and real estate may appreciate.
Using Ratios for Allocation Decisions
No single ratio should drive your entire investment strategy, but tracking multiple gold ratios provides a multi-dimensional view of the precious metals market. Here is a practical framework:
- Monitor the gold-to-silver ratio to decide how to split your precious metals allocation. Favor the relatively cheaper metal.
- Check the gold-to-Dow ratio to calibrate your overall allocation between precious metals and equities.
- Watch the gold-to-oil ratio for economic cycle signals that may support or undermine the bull case for gold.
- Use the gold-to-platinum ratio to identify value opportunities within the precious metals complex.
- Review the gold-to-real estate ratio for long-term wealth preservation perspective.
Track current prices for gold, silver, and platinum on MintBuilder's live spot prices page to calculate these ratios in real time.
Frequently Asked Questions
- What is the gold-to-silver ratio?
- The gold-to-silver ratio is the price of one ounce of gold divided by the price of one ounce of silver. It tells you how many ounces of silver it takes to buy one ounce of gold. The long-term average is approximately 50:1 to 60:1, but the ratio can swing from below 20:1 to above 100:1 during extreme market conditions.
- How do I use gold ratios to make investment decisions?
- Gold ratios help you identify relative value. When a ratio is far above its historical average, the denominator asset (silver, platinum, oil, etc.) may be undervalued relative to gold. When the ratio is far below average, gold may be the better value. Use ratios as one input alongside fundamental analysis and your personal financial goals.
- What does a high gold-to-silver ratio mean?
- A high gold-to-silver ratio (above 80:1) means silver is historically cheap relative to gold. Many precious metals investors view this as a signal to favor silver purchases, as the ratio has historically reverted toward lower levels, which would benefit silver holders. Read more in our gold vs. silver comparison.
- Is the gold-to-Dow ratio useful for timing gold purchases?
- The gold-to-Dow ratio is more useful for long-term strategic allocation than short-term timing. When the ratio is high (many ounces of gold needed to buy the Dow), stocks are expensive relative to gold, suggesting gold may be the better value. Extreme readings at either end historically signal major secular turning points.
- Why has gold traded above platinum since 2015?
- Gold has traded above platinum due to surging investment demand for gold (driven by central bank buying, geopolitical risk, and inflation hedging) combined with weakening industrial demand for platinum as the automotive industry shifts away from diesel engines. This inversion may eventually revert, making platinum attractive at current ratios. See our platinum outlook for more analysis.
- Where can I track live gold ratios?
- You can calculate current gold ratios using live spot prices from MintBuilder's spot prices page. Divide the gold price by silver, platinum, or oil prices to compute the ratios in real time. Many financial websites also publish pre-calculated ratio charts.
- Should I use gold ratios as the sole basis for investing?
- No. Gold ratios are one valuable analytical tool among many. They should be combined with fundamental analysis, an understanding of macroeconomic conditions, your personal financial goals, and proper portfolio allocation principles. Ratios help identify relative value but do not predict absolute price direction. See our guide to timing gold purchases for a more comprehensive approach.
Gold ratios provide a powerful lens for evaluating precious metals relative to other assets. By tracking these key metrics, you can make more informed allocation decisions and identify opportunities that raw price data alone may not reveal. Explore MintBuilder's gold products and use the live spot prices to start applying these ratios to your own investment strategy.