Page 76 - Introduction to investing in Gold

The gold:silver ratio is the proportional relationship between gold and silver prices. Put simply, it describes how many ounces of silver can be bought with one ounce of gold.
Gold has always been more expensive than silver. Historically, the gold:silver ratio has only really moved around a lot since just before the beginning of the 20th century. For hundreds of years prior to that, the ratio, set by governments for purposes of monetary stability, was fairly steady, ranging between 12:1 and 15:1.
The Roman Empire officially set the ratio at 12:1, and the U.S. government fixed the ratio at 15:1 with the Mint Act of 1792.
The discovery of massive amounts of silver in the Americas, combined with a number of successive government attempts to manipulate gold or silver prices, led to substantially greater volatility in the ratio throughout the 20th century.
When President Roosevelt set the price of gold at $35 an ounce in 1934, the ratio began to climb, peaking at 98:1 in 1939. Following the end of World War II and the Breton Woods Agreement of 1944, which pegged foreign exchange rates to the price of gold, the ratio steadily declined, nearing the historical 15:1 level in the 1960s and again in the late 1970s after the abandonment of the gold standard. From there, the ratio rose rapidly through the 1980s, peaking at 100:1 in 1991 when silver prices declined to a low of less than $4 an ounce.
In the 20th century, the average gold:silver ratio was 47:1. In the 21st century, the ratio has ranged between 60:1 and 89:1.
It’s not a fixed ratio but a useful guide for comparing the relative values of gold and silver.
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