According to my new research, there is a very important Gold-Silver ratio that every precious metals investor needs to know about. While most precious metals investors are familiar with the Gold-Silver price ratio of 68/1 (presently) as well as the Silver-Gold production ratio of nearly 9/1 (2015), they have no idea about an even more important ratio that I will explain below.
Before I get into this important Gold-Silver ratio, let’s quickly examine some of the historic ratios listed above.
The Historic Gold-Silver Price Ratio Briefly Explained
The Gold-Silver price ratio remained 15/1 (thereabouts) for centuries until it started to rise in 1874, due to the Coinage Act of 1873 that stated:
The Coinage Act of 1873 or Mint Act of 1873, 17 Stat. 424, was a general revision of the laws relating to the Mint of the United States. In abolishing the right of holders of silver bullion to have their metal struck into fully legal tender dollar coins, it ended bimetallism in the United States, placing the nation firmly on the gold standard. Because of this, the act became contentious in later years, and was denounced by people who wanted inflation as the ‘Crime of ’73’ (Source: Wikipedia)
By removing silver as legal tender in 1873, this impacted the value of silver. There have been many conspiracy theories stating that the Coinage Act of 1873, which ended the bimetallism standard (gold & silver), destroyed the value of silver as money. However, congress passed a law called the Bland-Allison Act in 1878 that required the U. S. Treasury to purchase silver every month to make Silver Dollars:
This post was published at SRSrocco Report on September 8, 2016.