After the general demonetization
of silver in the second half of the nineteenth century that constant alliance
broke. The gold/silver ratio was as wide as 1:90 in the 1930s. Although it came
back momentarily to 1:17 in 1980 in the Hunt Brothers’ attempt to corner
the silver market, it has fluctuated widely since World War II in a range from
1:30 to 1:98. Although there is no logic to the modern ratio, speculators do
play the ratio, selling gold, buying silver and vice versa at what are seen
as crucial chart points in technical
analysis.
Gold/Silver Ratio
The number of ounces of silver
that can be bought with one ounce of gold.
Historically, while both were monetary metals, the ratio was fairly constant,
although it might vary from continent to continent. In Mexico and South America,
where silver was mined, it was 1:17; in Europe it was 1:15 and in India and China
it was 1:13 or even 1:12. That variation determined flows. Since silver was more
highly valued in the east it was exported there from Europe from the sixteenth
century to pay for goods, while gold largely stayed in Europe.