The gold-silver ratio has been with us for thousands of years, and it was first conceptualised during the times of the Roman Empire. Putting it simply, the gold-silver ratio is how many ounces of silver it takes to purchase an ounce of gold.
It is something that serious investors pay a lot of attention to as it can give them insight into investing in precious metals and help them invest wisely.
Many people are not aware of the gold-silver ratio, and if you are one of them, below is a summary of everything you need to know about it.
The Roman Gold-Silver Ratio
Humans have been mining precious metals for thousands of years, and gold and silver were precious during the time of the Romans and even before that.
However, the Romans first came up with the gold-silver ratio to track the value of the two most commonly sought-after precious metals. When they first came up with the concept, they set the balance at 12:1, meaning it takes 12 ounces of silver to purchase one ounce of gold.
The ratio lasted for much longer than the Roman Empire and did not greatly change until much later.
The Ratio Starts To Change
Around the 1500s, we start to see the ratio changing, which probably had much to do with Europeans colonising the rest of the world and plundering the riches.
During this time, the gold and silver ratio jumped to 15:1, meaning it now cost 15 ounces of silver to purchase one ounce of gold.
Generally, this ratio was intact for hundreds of years, and it was not until modern times when we saw massive changes in the gold and silver ratio.
The Modern Gold-Silver Ratio
If you fast forward to the 1980s, we start to see a big shift in the gold-silver ratio, when we also see the value of gold going through the roof. In 1980 the ratio changed to 16:1, but in the 1990s, the ratio went through the roof.
In 1991 the ratio jumped massively to 100:1, meaning you needed 100 ounces of silver to buy one ounce of gold.
One of the primary reasons for this was due to silver hitting a historically low value, and this ratio has been kept similar up until today.
In 2020, the ratio peaked at an all-time high of 114:1, meaning it cost 114 ounces of silver to purchase one ounce of gold.
When you are searching to buy Adelaide silver bullion and even gold ones, the prices have gone through the roof since the global pandemic, with many investors turning to precious metals rather than investing in stocks and shares.
The same thing is true to most other locations outside Australia as well.
Meanwhile, gold is still sitting at around $1,800 in the US, so it does not look like the ratio will drop anytime soon. As such, gold is presently an excellent investment vehicle and has historically been a hedge against inflation, attracting many investors.
If you are looking to invest in precious metals, you will want to do plenty of research and understand the gold-silver ratio. The more knowledge you have, the better decisions you can make when choosing your ideal investment.