By Jason Russ
Seeking Alpha
The current gold/silver ratio is near 66, which is bullish for silver. The average of the ratio over the last four years was about 55. I predict a 25% rise in silver prices within 12-18 months.
How do we measure its worth? One important metric is the gold to silver ratio. That is, simply the price of gold divided by the price of silver.
There has always been a high correlation between gold and silver prices. In fact, throughout much of history, the ratio was fixed. Here are some highlights (source – investopedia.com):
- 323 B.C.: The ratio stood at 12.5 upon the death of Alexander the Great.
- Roman Empire: The ratio was set at 12.
- End of 19th Century: The nearly universal, fixed ratio of 15 came to a close with the end of the bi-metallism era.
In ancient Egypt, when silver was first introduced it was very likely more valuable than gold. Those Egyptians from around 2500 B.C. considered gold to be the skin of the ancient Egyptian gods and silver to be the bones.