Gold to Silver Ratio

In terms of the presence of these metals inside the earth’s surface, the gold-silver ratio is 16:1. Even the ratio 19:1 is considered. Until the twentieth century, the historical gold-to-silver ratio remained steady from as early as the beginning of the ancient Greek civilisation or tilted towards gold, only slightly.

For instance, in ancient Athens, the gold-silver ratio was 13:1, i.e., 13 ounces of silver was required in order to purchase 1 ounce of gold. Until the turn of the Common Era, this ratio remained stable at 10:1 in the Roman Empire and other parts of Europe.

By the fifth century CE, it seems that gold became scarce as it was 14:1 during the Constantine and the Justinian era. Gold supplies were restored in the later centuries, as is evident from the ratio of 10:1 during the time of St. Louis in the eleventh century.

These rates persisted from the twelfth to the seventeenth century, which began to tilt towards gold again as Isaac Newton exchanged gold for silver at a ratio of 15.5:1. 

However, similar trends in Europe were not visible in other parts of the world. This is because the supply and demand of these metals differed across various geographies and times. 

For instance, in India, it has been argued that gold has been in abundance in supply with respect to silver. Historically, gold mines in Karnataka have been a rich source of supply in India, which helped peg the gold-silver ratio at 8:1.

However, the global gold-silver ratio began to be highly skewed towards gold because of the following reasons:

• The discovery of new deposits of silver in the New World tanked the prices of this precious metal

• The British and the US governments made successive efforts to manipulate gold prices

The ratio peaked to 98:1 in 1939, which declined only after the end of the Second World War. The ratio declined steadily when the valuation of currency was pegged with the gold standard following the Bretton Woods Agreement.

Throughout the 1980s, the ratio rose rapidly to fall again in the last decade of the twentieth century. 

In the twenty-first century in India, the gold-silver ratio reached its first peak in 2008 when it reached 80:1. From there, it slumped before rising to cross the 85:1 mark in 2018.

During the coronavirus pandemic in 2020, this ratio even reached 99.5:1.