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dom1971
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The Silver:Gold Ratio, 1687-2011

- Nathan Lewis - New World Economics

Yes, historically 16:1, and around that (maybe 19:1) in the Earth's crust. But does that mean silver is under-valued relative to gold or that gold is over-valued relative to silver? That's the question.

To be fair the talk had a lot of focus on China and Britain, where it seems silver played a part in the coinage of those countries until much later than 1870. To have the context shift suddenly to the USA was not as obvious to me Vox. Since Britain was the major financial player up until after WWII there is no reason to shift context to the USA when speaking generally or universally. Australia's last silver coins were minted in 1969, just for the record.

Yes Vox. vast amounts of silver were discovered and mined from the USA which did indeed distort supply at the time. Vast amounts of gold were brought back by the Spanish from the "new world" earlier with a similar effect. However we must also acknowledge that as history continues a) the total above ground gold increases by maybe 1% per year and b) the chances of finding some "mother load" that could distort this ever-growing hoard diminishes with every passing year. For gold, that is, since silver is largely "consumed" (although historically not until the industrial revolution). In short I accept that supply changes happened - when humanity was still in an age of discovery and colonies - but don't hold much chance of it happening again on that relative scale - at least until we can lasso a solid gold asteroid or two.

Gold and silver were probably better money for the world at large, but we are not in that age now. Paper would be great money if we could trust ourselves, let alone our leaders. Nowadays its cheap to make, easy to win and easier to lose. But hey, at least we have a middle class.

Commented 3686 days ago

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Beginning of the headline :We have something special this week: the open market value of silver, compared to gold, over a period of over three centuries. The location is London. For a long time, silver and gold were, in a sense, two versions of the same thing, just like one dollar bills and twenty dollar bills are today. Their ratio of value was not perfectly stable, like the 20:1 ratio of $1 bills and $20 bills, but it was quite stable between about 16:1 and 15:1. Both silver and gold ser... Read More

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