BMO Gold Silver Ratio Nears Historic Bottom as Silver Rally Raises Red Flags

Published On: January 22, 2026

The BMO gold silver ratio has dropped to levels not seen in more than a decade, prompting a cautionary note from BMO Capital Markets, which warns that silver’s recent outperformance against gold may be running ahead of underlying fundamentals.

According to BMO analysts, the gold-to-silver ratio has fallen to around 50, its lowest level since March 2012, after peaking above 100 in April 2025. This sharp reversal reflects silver’s explosive rally, driven by speculative inflows, strong industrial demand, and a prolonged short squeeze in physical markets.

Silver Surge vs Gold Stability

Silver prices have climbed back above $91 per ounce, after briefly testing record levels near $93, marking a gain of more than 27% so far in 2026. By contrast, gold has remained comparatively stable, holding above $4,600 per ounce and posting a year-to-date rise of just over 6%.

This divergence has compressed the BMO gold silver ratio, a key metric investors use to compare relative value between the two precious metals.

BMO: Ratio May Fall Further, But Not for Long

BMO analysts acknowledge that the ratio could still move lower in the short term, especially if geopolitical tensions and speculative “meme-style” investment flows continue to favor silver.

However, the bank believes this trend is structurally unsustainable.

“We forecast a growing surplus of physical silver units, which will inevitably cause the gold:silver ratio to rise in the coming years,” BMO said, noting that since the end of the Bretton Woods system in the 1970s, periods of rising physical surplus have consistently led to a higher gold-to-silver ratio.

Why Physical Supply Matters More Than Speculation

BMO argues that much of the current narrative around silver deficits is misleading because it includes investment demand, not just real-world consumption.

According to the bank:

Most silver stocks are held by investors, not end-users
A true market balance should compare industrial, jewellery, and silverware consumption against supply
Historically, supply has exceeded consumption, creating a physical surplus

This surplus, BMO says, is the key long-term driver behind silver’s tendency to underperform gold over time.

Solar Demand Peaking, New Tech Still Uncertain

One major concern highlighted by BMO is the solar power sector, which accounted for 58% of the increase in global silver consumption since 2020.

The bank now believes:

Solar installations are plateauing
Silver “thrifting” (using less silver per panel) is accelerating
Demand from solar may have already peaked

While emerging technologies such as solid-state batteries could eventually boost silver demand—potentially adding up to 100 million ounces annually by 2030—BMO stresses that commercial viability remains uncertain and years away.

Long-Term Outlook: Gold Favored Over Silver

Even under optimistic assumptions for electric vehicles and new battery technologies, BMO expects silver’s physical surplus to keep growing, putting pressure on prices relative to gold.

“While near-term exuberance could push the gold:silver ratio lower in the coming weeks, we expect the long-term trajectory to be firmly upward,” the analysts concluded.

Bottom Line for Investors

The BMO gold silver ratio is near historic lows
Silver’s rally is heavily driven by speculation, not just fundamentals
Rising physical supply could cap silver’s upside
Gold is likely to outperform silver over the long term, according to BMO

For investors, the message is clear: while silver may still have short-term momentum, the current ratio suggests growing downside risk if supply dynamics reassert themselves.