The precious metals market, led by gold and silver, has presented a compelling narrative in 2025, characterised by extraordinary gains followed by sharp corrections. The gold–silver ratio currently stands at a historically significant 84:1, indicating how many ounces of silver are required to purchase one ounce of gold. This key metric offers valuable insight into the relative performance, market dynamics and future price trajectories of both metals amid a period of heightened volatility. For instance, on October 24, 2025, gold was trading at approximately USD 4,111.89 per ounce, while silver was priced around USD 49 per ounce, resulting in a gold–silver ratio of roughly 84:1.
The Dramatic Gold and Silver Price Corrections of October 2025
The precious metals correction that unfolded in late October 2025 marked one of the most significant market reversals in over a decade. On October 21, 2025, gold experienced its steepest single-day percentage decline in more than ten years, plummeting 6.8 per cent from its peak of USD 4,381 per ounce to an intraday low of approximately USD 4,082.12. Silver’s correction proved even more severe on the same day, with the white metal falling nearly 13 per cent from its all-time high of USD 54.46 per ounce to around USD 47.56, according to TradingView data.
These dramatic declines came after an extraordinary bull run throughout 2025, with gold surging 55 per cent year-to-date and silver posting an even more impressive 66 per cent gain as of October 27, 2025. The meteoric rise had pushed both metals into severely overbought territory, with technical indicators flashing warning signals that a correction was inevitable.
Why Did Gold and Silver Prices Witness a Correction?
The correction was triggered by a confluence of factors that fundamentally shifted market sentiment. Profit-taking intensified as investors moved to lock in gains after months of sustained appreciation. At the same time, a stronger U.S. dollar rendered dollar-denominated commodities less attractive to international buyers. Most notably, easing geopolitical tensions highlighted by President Trump’s conciliatory remarks toward Xi Jinping reduced the immediate safe-haven demand that had driven precious metals to record highs.
Historical Context of the 84:1 Gold-Silver Ratio
The current gold-silver ratio of approximately 84:1 carries profound historical significance that extends far beyond simple price relationships. Throughout history, this ratio has served as a barometer for market psychology, economic conditions and relative value between the two monetary metals.
From ancient civilisations to modern markets, the ratio has exhibited remarkable variations. The Roman Empire maintained a fixed ratio near 12:1, while the U.S. Coinage Act of 1792 established it at 15:1. During the 20th century, the average ratio hovered around 47:1, but the abandonment of precious metals standards allowed for much wider fluctuations.
Source: Visual Capitalist
Understanding the 80–50 Rule:
The current gold-silver ratio of 84:1 places the market in historically significant territory, as silver has rarely been considered overvalued at such levels throughout history. Market professionals often refer to the “80–50 rule,” a strategy that suggests buying silver when the ratio exceeds 80:1 and rotating into gold when it drops below 50:1 or approaches that range. In April 2025, the ratio reached a high of 107:1, while the all-time record was set at 126:1 in March 2020.
Historically, when precious metals reached their previous bull market peaks in 1980 and 2011, the ratio compressed to approximately 15:1 and 32:1, respectively, reflecting periods of silver’s relative overvaluation at those extremes.
Supply-Demand Dynamics Driving the Correction
The precious metals correction unfolded against a backdrop of persistent supply-demand imbalances, particularly in the silver market. The silver market has experienced consecutive supply deficits since 2021, with 2024 recording a substantial shortfall of 184.3 million ounces. This structural deficit continues into 2025, with consumption projected to reach 1.21 billion ounces while supply remains at only 1.03 billion ounces, creating a deficit of approximately 182 million ounces.
Industrial demand for silver has reached record levels, driven by the green energy transition, electric vehicle production and expanding solar panel manufacturing. This industrial component, representing roughly 50 per cent of total silver demand, provides a fundamental support level that differs markedly from gold's primarily investment-driven demand profile.
The correction also revealed the impact of physical market dynamics on pricing. Silver had entered backwardation (future prices are lower than spot rate) in early October amid acute shortages in London, driving prices there significantly above New York levels. However, a massive influx of metal shipments from the U.S. and China alleviated these physical shortages, contributing to the price decline.
Federal Reserve Policy and Market Implications
The timing of the correction proved particularly significant, occurring just ahead of the Federal Reserve's pivotal October 28-29, 2025, policy meeting. Markets had largely priced in a widely expected 25-basis-point interest rate cut, but the correction highlighted the sensitivity of precious metals to both actual policy changes and forward guidance from central bank officials.
Lower real interest rates typically benefit precious metals by reducing their opportunity cost relative to interest-bearing assets. However, the market's reaction to the correction demonstrated that short-term technical factors and profit-taking can temporarily override fundamental monetary policy support.
The strengthening dollar that accompanied the correction created additional headwinds for precious metals. As the dollar appreciated against major trading currencies, gold and silver became more expensive for international buyers, reducing global demand and amplifying selling pressure.
Looking Forward: Structural Support Factors
Despite the sharp correction, several structural factors continue to support higher precious metals prices over the medium to long term. Central banks added 1,089 tonnes of gold in 2024, reinforcing demand amid currency devaluation concerns. This institutional accumulation provides a fundamental floor for gold prices that retail selling pressure cannot easily overcome.
Silver's industrial demand profile offers additional support through the ongoing energy transition. Solar panel manufacturing, electric vehicle production and data centre expansion all require substantial silver inputs. These industrial applications provide demand that is less sensitive to financial market sentiment and more tied to long-term technological trends.
The current correction is widely regarded as a “healthy reset” within the context of a longer-term bull market. By easing overbought conditions and allowing the market to consolidate, this phase may set the stage for renewed upward momentum once technical indicators stabilise and fundamental drivers such as demand growth and macroeconomic trends reassert themselves.
Conclusion: Opportunity Within Correction
The October 2025 precious metals correction, while dramatic in scope, represents a natural market adjustment following an unprecedented rally. The current 84:1 gold-silver ratio places the market at a historically significant inflexion point, with silver demonstrating compelling value relative to gold based on centuries of price relationships.
For strategic investors, the correction has created tactical opportunities to establish or enhance precious metals positions at more attractive levels. The fundamental drivers that propelled the 2025 rally, including monetary policy accommodation, geopolitical uncertainties and supply-demand imbalances, remain largely intact despite the recent price declines.
The silver market, in particular, benefits from both its historical undervaluation at current ratio levels and its expanding industrial demand profile. As the energy transition accelerates and technology applications multiply, silver's dual role as both a monetary and industrial metal positions it favourably for long-term appreciation.
While short-term volatility may persist, the current market environment offers patient investors the opportunity to position themselves advantageously for the next phase of the precious metals cycle. The 84:1 ratio environment, viewed through the lens of historical precedent, suggests that silver's correction may prove to be a temporary setback within a much larger structural revaluation still in its early stages.
Empowering Investors Since 1986, A SEBI-Registered Authority
Dalal Street Investment Journal
Contact Us
Gold and Silver Prices Correct: Is It Time to Bet on Silver Over Gold? The 84:1 Ratio May Hold the Answer