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IPFS News Link • Gold and Silver

Why The Gold/Silver Ratio Is A Useful Indicator

• by John Rubino

Some skeptics, for instance, view the original gold/silver ratio of 15 - from America's 18th century bi-metallic system – as just a political number pulled more-or-less out of thin air by Alexander Hamilton and therefore useless today. Others note that gold is a purely monetary metal and silver is part industrial, part monetary, and conclude that it's apples to oranges - and therefore not an indicator of future prices.

Both points are factually defensible, sort of. But they're also irrelevant. The real reason the gold/silver ratio has tended to fluctuate within a broad but well-defined range is that humans have a vivid visual imagination.