Why was the silver to gold ratio so much lower in Ancient/Medieval times?

Discussion in 'Bullion Investing' started by Gam3rBlake, Feb 12, 2021.

  1. Gam3rBlake

    Gam3rBlake Well-Known Member

    I was reading an article about Biblical currency and it mentioned that back then (1st century CE) the silver to gold ratio was approximately 16-20 to 1.

    Meaning for every 16-20 ounces of silver you had in coinage (actual silver content only) you had the equivalent purchasing power of 1 oz of gold in coinage.

    I believe the Roman gold Aureus had roughly 8 grams in gold content (at that time in the 1st century CE: it was debased over time by different Emperors to raise money) so if you lived back then you would have needed 148-160 grams of silver in the form of Roman silver denarii or some other Ancient currency to match it’s purchasing power.

    But the article did not explain why it was so low back then.

    Even 100 years ago the ratio was much much lower than now.

    $20 in 1923 Peace Dollars contained roughly 16 oz in silver (15.4 ozt to be precise) and they had the exact same purchasing power as a 1923 $20 Gold Double Eagle which was roughly 1 oz of gold.

    So the ratio was also roughly 16 to 1 as recently as 100 years ago.

    Now the ratio is approximately 67 to 1 and I’m wondering if there is rhyme or reason behind that?

    Is it because more silver is being mined and it’s become more plentiful than gold then it was in those days?

    Or is it just market manipulation of silver prices?
    Last edited: Feb 12, 2021
  2. Avatar

    Guest User Guest

    to hide this ad.
  3. GoldFinger1969

    GoldFinger1969 Well-Known Member

    The ratio was 16:1 in 1980 when gold and silver peaked. Many people used the ratio from those peak prices.

    The ratio has gone higher because silver is more volatile and gold has been used as a store of value. It has nothing to do with manipulation.

    Silver is also more widely used in the economy so it has a cyclical component.
    Rob Woodside likes this.
  4. Gam3rBlake

    Gam3rBlake Well-Known Member

    Well I mean how “volatile” can it be if it maintained a ratio of roughly 16:1 over thousands of years?

    But silver was also more widely used in the economy in those days too.

    Most often people used silver coinage and most people rarely even saw gold coinage let alone had it.

    Or are you talking about industrial use of silver like in computers & solar panels?
  5. GoldFinger1969

    GoldFinger1969 Well-Known Member

    Who said it maintained that rato for thousands of years ? The prices for gold and silver were often NOT set by the free market, such as after WW II.

    In the 1950's and 1960's, the G/S ratio was 35:1.
    Yes, but people didn't get silver and gold quotes from their computer screens.:D Prices rarely moved for weeks or months.
    Yes, going forward.
  6. JayAg47

    JayAg47 Well-Known Member

    Afaik 25 denarii equaled an Aureus, so if we take 3grams/denarius, it would be 75g of silver for a 7.5-8g gold, although it would be when Rome was at it's glory, whereas the value would've changed towards its decline. Also the Achaemenids before the Romans valued twenty 5.5g silver siglos for a 8g dirac.
    Rob Woodside and philologus_1 like this.
  7. Mr Roots

    Mr Roots Underneath The Bridge

    Double Eagle was worth 20 Silver dollars up till 1933
    GoldFinger1969 likes this.
  8. Gam3rBlake

    Gam3rBlake Well-Known Member

    It did change greatly over time.

    But regardless of specifics I think we can all agree: the silver to gold ratio was lower historically than now and now it is at all time highs historically.
  9. Gam3rBlake

    Gam3rBlake Well-Known Member

    I know that’s the point.

    A double eagle is almost 1 oz of gold.

    If you took in 20 silver dollar’s worth of silver (15.4 oz) you couldn’t even buy anywhere near 1 ounce of gold.

    Even 40 silver dollars worth of silver isn’t worth the .96 oz of gold in a Double Eagle.
  10. Gam3rBlake

    Gam3rBlake Well-Known Member

    From Biblical times to as recent as the 1930s Silver & Gold were at close to that ratio.

    That is thousands of years.
  11. medoraman

    medoraman Supporter! Supporter

    Gold to silver ratios historically were between 12 to 20 - 1. This is approximately the relative rarity in the earth's crust of the two metals.

    What was going on in the US post 1933 until 1974 is irrelevant since it was the US government artificially messing with the gold price.

    What has really happened is the rise of cultures who do NOT equally value gold and silver. I am talking here mainly about the far eastern nations. My wife is from one of them. They love gold, and use it for long term storage. Every small town has a gold shop in it. Silver, however, is nearly forgotten with almost no one desiring to own any silver at all. So, you now have extraordinary demand for gold, and a large part of the world population not caring about silver, so this is pulling the GSR apart.

    The GSR used to be useful, but it was assuming that the whole world desired both metals. With so much demand today for gold and only gold, the GSR is an ancient relic irrelevant today.
    Last edited: Feb 12, 2021
  12. GoldFinger1969

    GoldFinger1969 Well-Known Member

    The ratio has simply moved over time. Gold and silver had their prices suppressed in this country for decades. When they popped, gold moved more and held it longer.

    Relative prices do move over time.
  13. Colonialjohn

    Colonialjohn Active Member

    Since I do constant archeaometallurgy reading and no more research being retired I did remember these facts. These were written in April 2017 but still are worth noting:

    From the crustal abundance of precious metals, we can also see that the gold-to-silver ratio in the earth’s crust is about 1:19. This means that there is roughly 19 times more silver than gold in the ground.

    However, the mining gold-to-silver ratio is about 1:9 – only 9 ounces of silver are mined for every one ounce of gold. The reality from mining is a stark difference from scientific estimates.

    According to the annual survey reports from Thomson Reuters, there are 71,578 tons of ‘identifiable above-ground’ silver stocks. Compare this to the 187,200 tons of above-ground gold stocks. There is actually lesser identifiable silver than gold above-ground.

    Despite this, the gold-to-silver ratio, when comparing the prices of both metals, is about 1:70 at the time of writing. In other words, the value of an ounce of gold is equivalent to 70 ounces of silver!

    As mentioned previously:

    Gold is Hoarded While Silver Is Used


    Gold is hoarded...

    Studies have shown that 98% of all gold mined throughout history is still hoarded in the form of coins, bars, jewelry or artifacts.

    However, this is different for silver.

    Silver continues to be a popular choice in industrial applications given that it is the best element to conduct heat and electricity. This gives silver a myriad of uses.

    It is no wonder that silver can be found in thousands of products: printed circuit boards in computers and mobile phones, batteries, electronic switches, solar panels, television screens, RFID chips, etc.

    Silver is also used as an antimicrobial agent in medical applications. Its applications include silver being incorporated into wound dressings, treatment of mercury poisoning, used as a cauterizing agent, etc.

    Unfortunately, these industrial and medical uses of silver in products also see a large quantity of silver being discarded when these products are used and thrown away. They end up in landfills and are deemed uneconomical to recycle.

    It is no wonder then that there is less silver than gold above-ground today.

    A better discussion is knowing and buying 19thC Spanish Isabel II 2 Escudo contemporary circulating counterfeits with platinum as the debased metal in this Au/Pt/Trace Ag mixed alloy. Why was Pt used as a debased alloy in the 1800's? What two countries are known for mining Pt in the 1800's? Now correlate all this information to answer this question. What country was producing these 2 Escudo Au/Pt/Trace Ag CCCs?

    John Lorenzo
    United States
  14. medoraman

    medoraman Supporter! Supporter

    Platinum I believe was found in Brazil or Columbia, platinum meaning little silver in Spanish. In the 19th century, though, platinum main mining was Russia, who produced the 3 ruble coin with it. Therefore, I would suspect Russia, who also made false Dutch gold coins around the same time.
    GoldFinger1969 likes this.
  15. PeterD

    PeterD Member

    In pre-modern times, gold and silver were used to make coins. Therefore metal gave coins their value and coins gave metal their values. Today, this is not true. Metals are valued according to their demand. Therefore gold/silver ratios in historic times is not the same as in modern times. That is to say, the same things aren't being measured.
  16. potty dollar 1878

    potty dollar 1878 Well-Known Member

    Because they like meat and wine more than metals silver,gold etc to trade,eat and buy things:):)
  17. medoraman

    medoraman Supporter! Supporter

    Chicken and the egg. Coins were made out of PM BECAUSE they were valued. PM was not valued because they were in coins. Coins only "worked" because they contained a value of PM in them, a value they had whether they were coin shaped or not.
  18. harrync

    harrync Well-Known Member

    I don't have time to dig up my sources, so this is from memory, but I think basically correct. Ancient Egypt: two oz gold to one oz silver [yes, silver was more valuable than gold.] The most likely explanation was that gold was easy to spot, silver might just look like a black lump. Ancient Israel: 5 oz sliver to one of gold. There is no direct quote in the Bible, but some cleric figured out that ratio from a series of links. It went something like one oz gold for one slave; one slave bought two oxen; two oxen worth 100 bushels of grain; 100 bushels of grain worth 5 oz silver. [That's not his actual sequence, just made it up to show how it worked.] Apparently the Hunt Brothers were big Bible believers, and thought they were safe buying silver as long as the ratio stayed above 5 to one, thus kept buying even as the price got ridiculous. You can still find people studying the Biblical gold/silver ratio on some websites. Ancient Greece and Rome: about 10 to one. Middle ages until late 1800's: about 15 to one. Then the Comstock lode was discovered and silver flooded the market, so eventually the governments stopped free coinage of silver; that is, you could no longer take your silver to the mint and have it made into silver dollars. [And apparently the Comstock lode was overlooked for several years because people were so busy looking for gold no one paid attention to that "blueish sand".] Today: whatever the market decides. And note that a lot of silver is mined no matter what the price is; about half of all silver production is a byproduct of mining other minerals.
  19. Gam3rBlake

    Gam3rBlake Well-Known Member

    I have a book on coinage & currency in the Roman Empire and one thing I know for sure is that:

    1 oz of gold was NOT the value of a slave.

    I will look into it but I believe it says in the 1st century (biblical times) under Augustus the value of a slave was between 15000-25000 Denarii depending on age & gender. Young women were a premium due to being fertile and because any babies they had were automatically slaves of the mother’s owner. Young men also earned a premium for being in their prime for doing physical labor.

    I’m not quite sure how many ounces of gold that would be but I can quickly do the conversions and I know it’s more than 1 oz of gold in gold Aureii.

    I believe it was ~100 oz of gold.

    Today that would be $200,000 in gold.

    Slaves were VERY expensive.

  20. harrync

    harrync Well-Known Member

    As I noted in my post, I MADE UP the numbers to illustrate the principle used to reach the 5 to one ratio, not as actual numbers the cleric used. But your calculation of the price of a slave is interesting, thanks for that info.
    GoldFinger1969 likes this.
Draft saved Draft deleted

Share This Page