So what’s the importance if any, of this ratio for those that watch the 2 precious metals’ prices?
First off, this ratio was first used in the 1500′s in Europe to reflect the commercial marketability of the 2 metals. Since then, the ratio has been all over the map. The problem in using it, is that it can be misleading, in and of itself as there are many factors that determine the price of each one, independent of the other.
So those using the ratio as a relative measure and signal to determine the favor of one metal over the other, must use caution.
What’s the lesson? Buy both and / or what you can afford.
