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The Silver-Gold, Platinum-Gold and Palladium-Gold Ratios

The world of finance is full of ratios.  There is the P/E ratio (price to earnings ratio), the bid to cover ratio (bids for an asset relative to the amount sold), the return on assets ratio (the financial profit from the company relative to its assets on the book), and the earnings per share ratio (the reported earnings divided by the number of outstanding shares).  The list, of course, does not stop there.  Financial ratios also include liquidity ratios, profitability ratios, solvency ratios, efficiency ratios, and many, many others.

The topic here covers three important ratios in the precious metals universe.  The three are the silver to gold price ratio, the platinum to gold price ratio, and the palladium to gold price ratio.  All three capture how the price of gold is doing relative to the three other precious metals.  

Before looking, take a guess at which ratios might be going up (meaning gold is getting less valuable relative to the other precious metal) and which might be going down (gold getting more valuable relative to the other financial asset).

The Silver/Gold Ratio
Up first is the silver to gold price ratio.  Interestingly, this ratio has been on a long-term trend down since peaking at over $0.03 in mid-2011.  Except for short periods of relative strength in the price of silver, such as for most of 2016, gold’s price has consistently been growing faster than the price of silver.

The most recent figure, $0.011 is close to the all-time low silver saw in February 1991.  After bottoming in early 1991, the price of silver went on a run for the next six years, peaking at $0.025 on February 6, 1998.  Does this portend something on the horizon for silver in 2019?   

The Platinum/Gold Ratio
The next ratio is the platinum to gold ratio.  As with silver, the ratio has been generally trending down since mid-2014.  The most recent figure was $0.6011.  That is down almost 50 percent since the June 11, 2014 peak of $1.1751.  

For almost all the ratio history between platinum and gold, platinum has traded at a higher price than gold.  That has changed significantly this decade.  If one judged the decade based upon the silver/gold and platinum/gold ratios, one might call the 2010s the decade of gold.  It has been good to holders of gold.  

The Palladium/Gold Ratio
The third ratio is the palladium to gold price ratio.  The picture for gold is completely different compared with the previous two graphs where gold was consistently gaining more value than silver or platinum.  

Palladium is the precious metal booming this time.  Before the current run-up in the price of palladium, the ratio bottomed at $0.3942 on February 25, 2016.  Since then, the palladium/gold ratio has risen to $1.0033.  This is still a way away from the all-time ratio peak of $4.115 on January 26, 2011.  

Although it has generally been a good ride for holders of gold, the ride for holder of palladium has been much sweeter in the past couple years.

Overall, when it comes to price, palladium and gold have been the clear winners recently compared to silver and platinum.