Page 78 - Introduction to investing in Gold
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The Beginner's Guide to Investing in Gold
Key Chapter Takeaways
It’s important to look at the gold:silver ratio. It may be high or low – but it can be a useful guide as to whether one metal is particularly cheap or expensive relative to the other on a historical basis. For example, with the ratio particularly high at the moment, I like the idea of also having some silver in my portfolio. Don’t get me wrong, I also like gold, but the ratio implies that silver is worth a close look as well.
Given the ratio in the 21st century has ranged from 60:1 to 89:1, if it falls out of this range, you need to ask yourself the question, why? Does it mean that gold is particularly cheap or expensive?
ONGOING WORK
1.Keep an eye on this ratio (I cover this in my program). If it falls outside the historical range of 60:1 to 89:1, you may want to think about whether one metal is over or undervalued compared to the other.
2.Look into the reasons why the range has changed – is it clear?
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