For the actual overvaluation / undervaluation of silver, it is therefore best to follow the ratio between the price of gold and silver.
Over the past hundred years, the ratio between the price of gold and silver has been constantly changing dynamically. This also provides an opportunity for additional earnings in the form of obtaining an additional amount of one or another amount of precious metal upon exchange at a favorable ratio.
The lowest ratio during this time occurred in 1980 during the great manipulation of the Hunt brothers, when one gram of gold was worth 15 grams of silver.
By 1991, the ratio jumped to 1:91, which means that a gram of gold was already worth 91 grams of silver. And it fell again to 1:32 in 2011, which means that the price of silver rose so much that a gram of gold was worth only 32 grams of silver.
Then through the development of events a shock came to be in 2020, when in March of this year a gram of gold was worth an extraordinary 121 grams of silver.
Only a few months later, the ratio was approx. 1 : 70.
Framework guidelines for sales or the purchase of gold and silver shows the following relationship.
Silver is considered undervalued at a ratio of 1:80
At 1:40, the ratio is balanced.
Below 1:20, silver is overvalued.
The price of silver and gold, expressed in currencies, naturally rises significantly during periods of economic and financial crises. That’s when people realize that paper money is rapidly losing value and return to real, natural money that stores value. In a crisis, due to this property, the price of gold and especially silver rises sharply.
What can happen in the future with the price of silver expressed in dollars (and consequently euros)?
When the FED, the central bank of the USA, in the recession of 2008-2009, “quantitatively released” or created 1,200 billion dollars from nothing, then the price of silver grew by 4.4 times in three years.
In the current crisis situation of 2020-2021, the FED quantitatively released a good 4,190 billion new dollars from scratch. And every month a few hundred new billions are added. In fact, in one year, the FED conjured up 35% of all the dollars that existed at any time in history. At the beginning of 2022, this number has already risen to 8,000 billion new dollars!
History does not remember such a financial experiment. But history teaches us that every coin has two sides. And the other side of the tremendous increase in the availability of money is inflation. The higher the growth of money, the higher the inflation will be.
High inflation, however, destroys people’s savings. In such years, gold and especially silver, which is more useful in everyday life, represent protection against the decline in the value of money.
At the same time, the value jumps up. Thus, during the crisis in the 1930s, one silver coin, which today is worth maybe 30 euros, could support the whole family for the whole week.