A SILVER underdog and a correction of the Gold to Silver ratio
The History of the Gold-Silver Ratio
Citation: www.investopedia.com...goldsilver-ratio.asp
Historically, the gold-silver ratio has only evidenced substantial fluctuation since just before the beginning of the 20th century. For hundreds of years prior to that time, the ratio, often set by governments for purposes of monetary stability, was fairly steady.
The Roman Empire officially set the ratio at 12:1.
The ratio reached 14.2:1 in Venice in 1305 and remained at this level up until 1330 when it fell to 10:1.
In 1350 it fell to 9.4:1 in some places across Europe. It climbed back to 12:1 in the 1450s.
The U.S. government fixed the ratio at 15:1 with the Coinage Act of 1792.
The discovery of massive amounts of silver in the Americas, combined with a number of successive government attempts to manipulate gold and silver prices, led to substantially greater volatility in the ratio throughout the 20th century.
When President Roosevelt set the price of gold at $35 an ounce in 1934, the ratio began to climb to new, higher levels, peaking at 98:1 in 1939. Following the end of World War II, and the Bretton Woods Agreement of 1944, which pegged foreign exchange rates to the price of gold, the ratio steadily declined, in the 1960s and again in the late 1970s after the abandonment of the gold standard. From there, the ratio rose rapidly through the 1980s, peaking at 97.5:1 in 1991 when silver prices declined to a low of less than $4 an ounce.
For the whole of the 20th century, the average gold-silver ratio was 47:1. In the 21st century, the ratio has ranged mainly between the levels of 50:1 and 70:1, breaking above that point in 2018 with a peak of 104.98:1 in 2020. The lowest level for the ratio was 35:1 in 2011.
When Was the Gold-Silver Ratio at Its Highest?
The highest the gold-silver ratio has been in recent history was in April of 2020, following the onset of the COVI19 pandemic, when the price of gold outpaced silver by more than 125:1.
What Is the Historic Long-Run Average for the Gold-Silver Ratio?
The long-run average gold/silver ratio is around 65:1 since the 1970s when the gold standard was abandoned. Historically, however, the ratio hovered more around 15:1.
From Peter Frankopan's book "The Silk Roads"
Chapter 12: The Road of Silver
Page: 235
As Adam Smith later noted in his famous book on the wealth of nations, "the discovery of America and that of a passage to the East Indies by the Cape of Good Hope, are the greatest and most important events recorded in the history of mankind." The world was indeed transformed by the roads of gold and silver that opened up following Columbus' first expedition and Vasco da Gama's successful journey home from India.
Page: 233
"In China, silver's value hovered around an approximate ratio to gold of 6:1, significantly higher than in India, Persia, or the Ottoman Empire; its value was almost double its pricing in Europe in the early sixteenth century."
More Gold Than Silver Above-ground
Citation: www.silverbullion.co...Gold-and-Silver/2038
From the crustal abundance of precious metals, we can also see that the gold-to-silver ratio in the earth’s crust is about 1:19. This means that there is roughly 19 times more silver than gold in the ground.
However, the mining gold-to-silver ratio is about 1:9 – only 9 ounces of silver are mined for every one ounce of gold. The reality from mining is a stark difference from scientific estimates.
According to the annual survey reports from Thomson Reuters, there are 71,578 tons of ‘identifiable above-ground’ silver stocks. Compare this to the 187,200 tons of above-ground gold stocks. There is actually lesser identifiable silver than gold above-ground.
Despite this, the gold-to-silver ratio, when comparing the prices of both metals, is about 1:70 at the time of writing. In other words, the value of an ounce of gold is equivalent to 70 ounces of silver!
Citation: www.investopedia.com...goldsilver-ratio.asp
Historically, the gold-silver ratio has only evidenced substantial fluctuation since just before the beginning of the 20th century. For hundreds of years prior to that time, the ratio, often set by governments for purposes of monetary stability, was fairly steady.
The Roman Empire officially set the ratio at 12:1.
The ratio reached 14.2:1 in Venice in 1305 and remained at this level up until 1330 when it fell to 10:1.
In 1350 it fell to 9.4:1 in some places across Europe. It climbed back to 12:1 in the 1450s.
The U.S. government fixed the ratio at 15:1 with the Coinage Act of 1792.
The discovery of massive amounts of silver in the Americas, combined with a number of successive government attempts to manipulate gold and silver prices, led to substantially greater volatility in the ratio throughout the 20th century.
When President Roosevelt set the price of gold at $35 an ounce in 1934, the ratio began to climb to new, higher levels, peaking at 98:1 in 1939. Following the end of World War II, and the Bretton Woods Agreement of 1944, which pegged foreign exchange rates to the price of gold, the ratio steadily declined, in the 1960s and again in the late 1970s after the abandonment of the gold standard. From there, the ratio rose rapidly through the 1980s, peaking at 97.5:1 in 1991 when silver prices declined to a low of less than $4 an ounce.
For the whole of the 20th century, the average gold-silver ratio was 47:1. In the 21st century, the ratio has ranged mainly between the levels of 50:1 and 70:1, breaking above that point in 2018 with a peak of 104.98:1 in 2020. The lowest level for the ratio was 35:1 in 2011.
When Was the Gold-Silver Ratio at Its Highest?
The highest the gold-silver ratio has been in recent history was in April of 2020, following the onset of the COVI19 pandemic, when the price of gold outpaced silver by more than 125:1.
What Is the Historic Long-Run Average for the Gold-Silver Ratio?
The long-run average gold/silver ratio is around 65:1 since the 1970s when the gold standard was abandoned. Historically, however, the ratio hovered more around 15:1.
From Peter Frankopan's book "The Silk Roads"
Chapter 12: The Road of Silver
Page: 235
As Adam Smith later noted in his famous book on the wealth of nations, "the discovery of America and that of a passage to the East Indies by the Cape of Good Hope, are the greatest and most important events recorded in the history of mankind." The world was indeed transformed by the roads of gold and silver that opened up following Columbus' first expedition and Vasco da Gama's successful journey home from India.
Page: 233
"In China, silver's value hovered around an approximate ratio to gold of 6:1, significantly higher than in India, Persia, or the Ottoman Empire; its value was almost double its pricing in Europe in the early sixteenth century."
More Gold Than Silver Above-ground
Citation: www.silverbullion.co...Gold-and-Silver/2038
From the crustal abundance of precious metals, we can also see that the gold-to-silver ratio in the earth’s crust is about 1:19. This means that there is roughly 19 times more silver than gold in the ground.
However, the mining gold-to-silver ratio is about 1:9 – only 9 ounces of silver are mined for every one ounce of gold. The reality from mining is a stark difference from scientific estimates.
According to the annual survey reports from Thomson Reuters, there are 71,578 tons of ‘identifiable above-ground’ silver stocks. Compare this to the 187,200 tons of above-ground gold stocks. There is actually lesser identifiable silver than gold above-ground.
Despite this, the gold-to-silver ratio, when comparing the prices of both metals, is about 1:70 at the time of writing. In other words, the value of an ounce of gold is equivalent to 70 ounces of silver!
