By Nicholas Larkin May 27 (Bloomberg) -- The ratio of silver prices to gold may drop by as much as a third within three years because of improving industrial demand, according to broker GoldCore Ltd. An ounce of gold bought about 66.4 ounces of silver in London yesterday. The attached chart shows the ratio has been declining since 1991, and may fall toward 45, the average over the past century, according to GoldCore. The second attached chart shows silver’s rising trend since October 2008. Silver “is both a precious metal like gold, and a huge amount of silver gets used in industrial applications,” Mark O’Byrne, executive director of GoldCore in Dublin, said in an interview. “It’s almost inevitable that over time the ratio will revert to lower levels.” Silver is used in photography, electronics and industrial products from ball bearings to chemical catalysts. The metal traded at $18.25 an ounce in London today and is up 8.1 percent this year after advancing 48 percent in 2009. The metal may climb toward $20 should it exceed resistance levels between $19.20 and $19.30, O’Byrne said. The gold-silver ratio may fall toward 45 in two to three years, he said. In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net.

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