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Can anyone tell me, or point me to documentation that shows the historic relationship between gold and silver prices? Or, better yet, can anyone point me to a source that shows monthly or weekly gold and silver prices for perhaps the last 50-75 years?
I thought I read somewhere that silver has always traded at some percentage of gold, but recently this relationship has recently gotten very skewed.
Thank you.
Goldprice.org has some actual graphs of gold silver ratio. http://www.goldprice.org/gold-silver-ratio.html
The gold/silver ratio has been all over the place depending on where in history you are talking about. In the 1800s, it was about 17 and set there by the govt. In more recent times, it's been about 60, but varying widely in the last 30 years, going from 20 to 100 during that time. Since gold has gone up quite a bit in the last ten years, I'm not surprised that the ratio is different from a historical average. However I would mention that there are two ways the ratio can correct itself. Either silver can go up or gold can go down. If your expectation turns out to be wrong, you could be out a good deal of money.
Silver typically follows what gold does, but with more volatility. The metals have different uses, so the demand for them is not driven by the same forces.
Gold influences the price of silver, not the other way around. Governments want gold more than they want silver, if at all.
They rise and fall in tandem mainly because there's a perception that the two metals are tied together. They're both scarce, but then again a lot of other things are scarce, too.
At the bottom of this page is a history of the gold/silver ratio for the past 35 years. The ratio is far from constant. It varied by a factor of seven: about 14 when the Hunt brothers tried to corner the silver market in the early 1980s, to over 100 in the recession of the early 1990s.
For what it's worth, here is a Granger causality test on 10 years of daily gold and silver data downloaded from Nasdaq.
Here is the data plotted:-
and here are the Granger test results:-
This shows in the 16th lag a significantly low probability of the null hypothesis that the price of gold does not affect the price of silver. That is to say, the price of gold Granger-causes the price of silver.
The daily data does not include weekends so on average 16 lags is 21.8 days in calendar terms.
Disclaimer: This is not a field of expertise for me, just an area of interest. 16 lags sounds quite long so I'd want to look into it before using this result. Nevertheless, the significance at 6, 8 & 10 lags is also fairly low and not as far out as 16.
The algorithm used is described here: How to formally tell if one time series affects another? An online Granger causality calculator is mentioned there too, but it only calculates up to 11 lags.
This google chart offers a view of the gold and silver prices (through an ETF) side by side. Unfortunately, the ETFs have only been around for 5 or so years. I'm only including this as another view; @chrisfs answer is definitely more complete.
Actually the ratio has come down generally speaking in the last several years, as you can see with the checked answer. Many of the "big silver and gold guys" say the historical ratio, going far back, is 16 to 1. Some say because it has been out of whack for a long time, will overshoot to 12 to 1 or less.
They say next to oil, silver has the second most industrial uses. I don't know if that is true, but it would appear that technology is changing the landscape for uses of this metal. That's a general trend -- e.g. you might see the effect of how changing photography effects silver use / demand (I have no idea, but believe it was used quite a bit in photography).
For some of the bigger names in the gold / silver market, see the comments in Is the gold and silver in the GLD and SLV ETFs leveraged? . Then you can google them and see what they say on historical gold silver ratio.
