Historically speaking (prior to WWI), the gold-silver ratio (price of an ounce of gold to an ounce of silver) often fluctuated between 10 and 15. I have read that in ancient Egypt, the ratio was once close to 1.

By the end of WWI, the ratio was around 19.

After hitting a high of nearly 100 in 1940, it settled back down to roughly 17 in 1968. It was again around 17 in January 1980 when silver skyrocketed briefly to $50 per ounce.

By the time of the Gulf War in 1991, it was again close to 100, and then exceeded 100 in March 2020 when the Corona virus scare hit in earnest.

At present, it is around 79.

QUESTION: What technical\fundamental factors tend to cause gold to be more expensive relative to silver; and visa-versa? Is there any significance to today's relatively high ratio of 79. What factors today are likely to cause it to go higher? to go lower?

Thank you.


4 Answers 4


Gold-silver ratio is meaningless.

Gold and silver are used in industry as components of a lot of electronics and industrial equipment. They're used differently, in different ways, and in different quantities, so you would probably want to check how that affects the supply and the demand. To clarify - this would explain the price movement of each of these commodities, but there's no much correlation between them.

In addition there's a lot of speculation going on with these specific metals (and also copper and platinum). They're being peddled as "inflation hedges" (they're not), they're being sold to bullion collectors and preppers, and they're being hoarded by private individuals and sometimes governments (although significantly less nowadays - most largest governments' reserves remain unchanged).

In ancient Egypt, both gold and silver were used for the same purpose - jewelry and money. As such, the correlation was strong. This signals nothing with regards to the modern markets.

  • 1
    This doesn't answer anything to the question of why the ratio is currently so high, historically speaking, and only responds to the question about significance by bald assertion. Jan 13, 2023 at 16:56
  • 1
    @KevinArlin read the first sentence. If it meaningless, then there's no reasoning as to specific value.
    – littleadv
    Jan 13, 2023 at 18:19
  • 1
    So you really claim this is just totally random? That seems unlikely, and your second paragraph already tries to suggest there are unspecified supply and demand reasons. Jan 13, 2023 at 19:11
  • 5
    @KevinArlin the price movement of each is not random, the ratio is. You can also look for ratios between potatoes and nike snickers, if you really want, but does it have any meaning? No.
    – littleadv
    Jan 13, 2023 at 19:38
  • 4
    My favorite is oranges and orangutans... The fact that you can compute a number does not mean it must be useful for any particular task.
    – keshlam
    Jan 14, 2023 at 6:13

This is more of an economics question than a personal finance question, but nevertheless for people who are storing their personal wealth in gold or silver, it is a natural question.

The main answer to the question is that gold's monetary usage has increased considerably compared to that of silver in modern times. In other words, the extent to which gold is used as a monetary proxy has increased relative to the same use for silver. In ancient times, silver was an important monetary metal and item of trade, but silver is rarely used for coinage or any monetary purpose anymore. However, gold continues to be an important monetary instrument. Hundreds of billions of dollars worth of gold are traded every day for monetary purposes, but the same is no longer true for silver.

Also, silver continues to get recovered at a high rate as a byproduct of copper mining, so its supply is nevertheless strong. For example, every year Kennecott recovers about 4 million ounces of silver from the Bingham mine compared with 400,000 ounces of gold. This constant byproduct production of silver tends to cheapen silver over time.

It is also worth mentioning that the Comstock lode, an entire mountain made of silver, significantly increased the world supply of silver. The lode is mined out now, but created hundreds of millions of additional ounces of silver in the world supply over its lifetime.

  • 1
    +1 I was not aware of what you mentioned regarding the Comstock lode; I'm glad you put it in your answer.
    – DDS
    Jan 14, 2023 at 16:19

It is not completely meaningless. At a minimum, one can certainly use it to tell interesting stories about historical events. Gold is barely used for anything but jewelry and as an investment. Silver on the other hand has lots of industrial uses. There is a geological limit to the supply of both precious metals. Since both Gold and Silver need to be mined, and are used in jewelry, coinage and investments, there must be some non-randomness in the ratio, provided investors and suppliers act rationally at least in the medium term.

Some factors affecting the relative price are:

  • Most big mining companies usually extract both gold and silver (as well as other minerals and precious metals). This leads to a joint supply relationships where resources are shifted towards the more profitable commodity. Ignoring differences in demand, the relative abundance of precious metals in the earth’s crust creates a natural limit to supply.
  • Jewelry demand is traditionally elastic.
  • There exist cross price elasticities between substitutes for jewelry (Gold, Silver, Platinum,...). Buyers tend to switch to the precious metal that becomes relatively cheaper.
  • Inflation expectations and uncertainty have a strong influence on gold, with higher inflation or uncertainty making gold relatively more expensive compared to other precious metals. That is why traditionally gold is seen as a safe haven and is bought in large quantities during crisis (similar to US treasuries for example).
  • Silver has more demand from industrial uses and therefore declines in economic downturns.
  • Even if there were no connection between silver and gold (not mined, not used in jewelry, not used as an investment and in coinage,...), as long as (institutional) traders believe there is a connection, there will be a tendency to buy and sell gold or silver if one becomes relatively cheaper. Here is a list of some trading platforms, investment banks and think tanks suggesting that there is such a connection: cmc markets, Investopedia, JP Morgan Center for Commodities UC Denver, Goldman Sachs,

Several statistical studies also clearly demonstrate cointegration between Gold and Silver. See for example

Prior to the 20th century, there was lots of direct government intervention, for example, the Coinage Act of 792, which defined the proportional value of gold and silver as 15 units of pure silver to 1 unit of pure gold. Also, markets were less developed and the main use of gold and silver was coins and jewelry. Geologists estimate that there are approximately 19 ounces of silver for every ounce of gold. Silver was finally demonetized in the US in 1873. On a long-term chart, as long as Gold and silver were used primarily as currencies, the main price influence of supply of Gold and Silver. For example, in the 1500s, large amounts of silver had flooded into Europe from the huge discoveries made by Spain in Mexico and Peru.

In modern times, Silver is used for plenty of things. Therefore, silver prices are impacted by lots of factors and typically demand is high when the economy is doing well. enter image description here

On the other hand, Gold is predominantly used for jewelry and as an investment. Many people buy Gold when times are worrying as it is seen as an inflation hedge. As a result, Gold prices go up in times of distress (wars, recessions, pandemics...).

enter image description here

Looking at the ratio, longtermtrends.net allows you to see a few historical events highlighted with a vertical bar and explained below from left to right. In general,

  • Recessions, wars and other times of uncertainties like oil crisis and inflation or pandemics lead to a relatively higher demand for gold, and low (industrial) demand for silver.
  • Periods or stability and economic growth tend to lead to silver prices rising relative to gold.

enter image description here

  • 1 ) 1919: end of WWI brings certainty and euphoria.

  • 2 ) 1929: beginning of the Great depression bringing lots of uncertainty and distress

  • 3 ) 1935: USD devaluation in 1933 and capital flight from Europe because of political instability after 1934 which lead to huge gold inflows into the US. Large GDP growth during this time (between 1933 and 1937, it rose 33 percent). (Another factor was the Second new deal / National Labor Relations Act/ Social Security Act, but overall, there were mostly favourable business situations)

  • 4 ) 1939: beginning of WWII - uncertainty

  • 5 ) 1944: end of WWII

  • 6 ) largely stable Gold prices due to Bretton woods - followed by a period of rapidly changing business conditions

  • 7 ) 1968: Thursday March 14 1968 Gold crisis: THE GOLD POOL (1961-1968) AND THE FALL OF THE BRETTON WOODS SYSTEM

  • 8 ) 1971: end of gold standard: President Nixon stopped the convertibility of the U.S. dollar to gold

  • 9 ) 1973 oil crisis - high inflation (expectations) increased gold prices relative to silver which declined due to subdued industrial demand in the following recession.

  • 10 ) 1975: The 1973-1975 US recession ended - calming markets and reducing gold demand

  • 11 ) 1979: End of energy crisis and Paul Volker takes office, raises interest rates and breaks inflation in 1980 which is why gold got very cheap relative to silver (lowest point in years).

  • 12 ) 1982: Silver prices plummeted after the COMEX adopted "Silver Rule 7", following the Hunt brothers attempt to corner the silver market. The Volker induced recession also lowered industrial demand for silver. Gold also decreased due to lower inflation (expectations) but silver lost even more value.

  • 13 ) OPEC lowered Oil prices for the first time in the Cartels history (easing inflation concerns) and the gold to silver ratio declined again because demand for gold as an inflation hedge went down

  • 14 ) Starting in 1979 there was a surplus of total silver supply over fabrication demand every year. On a cumulative basis, this surplus totalled 927 million ounces from 1979 through 1990, which lead to a relative decline of silver prices source. If silver goes down, the ratio goes up, provided gold does not decline as much. The peak in between was around the 1987 stock market crash (Black Monday Moreover, the Golf war started in 1990.

  • 15 ) 1991 marks the end of the 1st Gulf War. Subsequent decline due to low inflation in the period dubbed the Great moderation.

  • 16 ) The 1997 Asian crisis. Russian default led to Russia dumping its huge gold holdings. Long term capital management (LTCM) collapses. Global jewelry demand goes down significantly as a result of reduced income of buyers.

  • 17 ) 2001 dot com bubble and September 11 attacks, commonly known as 9/11 leading to increased demand for safe haven assets (e.g. gold).

  • 18 ) 2003 Invasion of Iraq

  • 19 ) 2007: Beginning of a Global Financial Crisis, called Great Recession with a peak in 2008 where the Gold to Silver ratio is peaking as well.

  • 20 ) QE2 starts, with a massive asset buying initiative by the US government where inflation fears start again.
    enter image description here

2020 COVID crisis and subsequent fluctuations caused by uncertainty and general volatility in markets.


Story telling may not be very useful. If you look at certain periods, it seems it can be highly profitable to trade the Gold to Silver Ratio as shown below from silverbullion for example.

enter image description here

However, trying to benefit, even if prices may continue to co-move like this will be difficult. It could be that silver and gold prices converge because Gold declines and silver increases. It may well be that both either decline or increase, but that relative prices converge. Also, increased usage of either precious metal in an industry or shifts in consumer preferences (jewelry etc) may shift the ratio to different values.

Last but not least, you may run out of funds before your (potentially) profitable trade will materialize. The aforementioned LTCM collapse was caused by this. The general idea was sound. Risk management and the lack of accounting for large outliers were poor. For short, markets can stay at certain levels longer than you can remain solvent.

  • 3
    So... what's the meaning?
    – littleadv
    Jan 14, 2023 at 7:21
  • There are some legitimate explanations for individual changes in the price of each - but don't be fooled that this implies correlation. The fact that the Bretton Woods system collapsed surely explains a drop in the price of gold at that time - but it is an independent event in regards to the $ of silver. Said another way - any historical correlation is no indication of future causation of price relationship. Dec 15, 2023 at 20:12

There is no relationship between the price of gold and the price of silver. Those who claim to interpret this imagined relationship are charlatans. Both metals have unique considerations in their supply and demand, so knowing the price of one does NOTHING to inform the price of the other.

  • 1
    Welcome Skip. I'm not claiming you are correct or incorrect, but a strong assertion requires strong and compelling data to back it up. Please add data to your answer to support your claim. Dec 18, 2023 at 3:21

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