Silver priced in gold: the gold/silver ratio

A 5,000 year ratio

For most of human history the gold-to-silver ratio sat between 10:1 and 16:1. The Roman Empire fixed it near 12:1. The US Coinage Act of 1792 set it at 15:1. Both metals were money, and the ratio reflected their relative scarcity in the earth's crust (silver is only ~8x more abundant than gold).

The 20th century break

After silver was demonetised — the US dropped silver from coinage in 1965 — the ratio drifted higher and became far more volatile. It hit ~100:1 in 1991, briefly touched ~125:1 in March 2020, and has spent most of the past decade between 70:1 and 90:1.

What the chart shows

When you plot silver priced in gold, you see a long, choppy decline from the early 1980s onwards punctuated by sharp silver rallies (1980, 2011, 2020). Silver bugs argue the ratio "should" return towards its historical 15:1 — which would imply silver massively outperforming gold from here. Skeptics argue silver is now mostly an industrial metal, not money, and the historical ratio no longer applies.

The chart is the argument.