Gold prices have risen to $1,360 an ounce while silver prices have surged to $20 an ounce.  That’s gold’s best finish in 28 months and silver’s best finish in 23 months.  Yet silver outperformed gold by jumping 26% since June compared to gold’s 9.7% during the same period.

The uncertainty leading up to the Brexit vote was certainly the spark that has led to the recent interest in precious metals.  But the fodder that burns brightly now is comprised of the growing concern over the state of the global economy.

Negative interest rates now impact one fifth of global GDP.  With the exception of India, BRICS countries’ economies are contracting.  There is uncertainty whether other countries might join the UK exiting the EU and whether the EU itself will survive.  And the one bright spot, the United States, have had a spate of mixed economic data that underscores the fragility of its modest recovery.

How much higher can gold and silver go?

One perspective is the silver-to-gold ratio.  This ratio is simply how many ounces of silver does it take to buy one ounce of gold.  Since the modern economy (when countries no longer fixed their currency to a set amount of silver or gold), that ratio has averaged approximately 50 ounces of silver to buy one ounce of gold.  Today’s ratio is 70 to one.

Either silver is underpriced or gold is overpriced.  To come in line with the modern historical ratio, silver would have to rise to $27 an ounce or gold would have to fall to $985 an ounce.  That means silver has the appreciation potential of 35% from current prices.

However, the silver-to-gold ratio before modern times was approximately 16 to one.  This mirrored the estimate that there is 17.5 times more silver than gold on earth.  Should these precious metals come in line with this natural ratio, silver would have to rise to $80 an ounce or gold would have to fall to $343 an ounce.

Given that it takes approximately $1,100 to mine one ounce of gold today, it is unlikely that gold prices will fall under its production cost.  But it is possible that silver has much more room to appreciate.  Using the silver-to-gold ratio analysis, silver prices might head north of $20 but way south of $80 an ounce.

Gold might get all the headlines but the under-appreciated opportunity might be silver.

Ed Moy served as the 38th Director of the United States Mint from 2006-2011. Moy is the chief strategist for Fortress Gold Group, a provider of gold IRA rollovers and physical U.S. gold and silver bullion coins for direct delivery. Read more from Ed Moy — Click Here Now.