The current gold-to-silver ratio suggests that silver is currently on sale and presents an attractive investment opportunity.

The gold:silver ratio indicates the number of silver ounces needed to purchase one ounce of gold, essentially expressing the price of gold in terms of silver. During precious metals bull markets, the ratio narrows as silver outperforms gold, while the opposite occurs during bear markets.

Presently, the ratio stands at over 87:1, requiring 87 ounces of silver for one ounce of gold. This ratio is historically high, considering the average range of 40:1 to 60:1 in the modern era. When the ratio deviates significantly from this range, as it has in recent years, it usually reverts to the mean.

For example, the ratio dropped to 30:1 in 2011 and below 20:1 in 1979. More recently, during the pandemic, the ratio surged to almost 93:1 due to the Federal Reserve's rate cuts and quantitative easing. At the pandemic's onset, it even surpassed 100:1.

However, as government shutdowns caused economic devastation, gold rallied, taking silver with it. Gold's price increased by 39%, surpassing $2,000 per ounce, while silver rose to nearly $30 per ounce, a 147% gain.

This substantial silver rally reduced the gold:silver ratio from over 100:1 to just over 64:1, approaching the historical norm's upper limit. As the Federal Reserve lowered interest rates to combat inflation, the ratio widened again, suggesting the potential for another significant silver price rally.

The supply and demand dynamics for silver are also favorable. Preliminary projections by the Silver Institute indicate that global industrial demand for silver in 2023 will set a record, leading to a substantial market deficit. This will mark the third consecutive annual silver supply deficit.

The 2022 production deficit was the most significant on record, according to the Silver Institute, which also noted that the combined shortfalls of the previous two years surpassed the cumulative surpluses of the last 11 years.

Given these dynamics, the current silver price does not reflect its true value. The gold:silver ratio confirms this, and with silver premiums being low, it may be an opportune moment to invest in silver.