The gold/silver ratio is one of the most-watched numbers in precious metals investing. Stackers obsess over it. Financial commentators cite historical averages as though they were natural constants. Online communities track it in real time. So what actually is it, and does it tell you anything useful?
What It Is
The gold/silver ratio is simple: it’s the number of ounces of silver it takes to buy one ounce of gold at current market prices. If gold is $4,100/oz and silver is $51/oz, the ratio is 80 — it takes 80 ounces of silver to buy one ounce of gold.
A higher ratio means silver is cheap relative to gold (or gold is expensive relative to silver). A lower ratio means silver is expensive relative to gold. The ratio doesn’t tell you the direction of absolute prices — gold and silver could both be rising or falling — only their relative value.
Historical Context
The ratio has moved dramatically over time, which is why it attracts so much attention.
Historical legal standards:
- The U.S. Coinage Act of 1792 fixed the ratio at 15:1, defining both the dollar’s gold and silver content.
- France maintained a similar ratio of approximately 15.5:1 under its bimetallic system.
- These legal standards reflect government decisions about exchange rates, not free-market discovery.
In modern free markets:
- Through much of the 20th century, the ratio ranged roughly from 15 to 50.
- It has been trending higher since silver’s demonetization — the loss of its monetary role removed a structural floor on silver demand.
- In modern times, the ratio has ranged from about 15:1 (briefly, around 1980, during the Hunt Brothers episode) to approximately 125:1 (briefly, during the COVID-19 market disruption in March 2020).
- As of late 2025, the ratio sits around 80, which is elevated by most historical comparisons.
The commonly cited “natural” ratio of 15:1 — sometimes claimed to reflect the actual abundance of silver vs. gold in the Earth’s crust — is approximately correct as a geological ratio, but it has essentially no relevance to modern market pricing. The crust ratio has never determined the market price ratio for any sustained period in modern history.
How Stackers Use It
The ratio trade, in its simplest form, works like this:
- When the ratio is high (silver cheap relative to gold), exchange gold for silver — you receive more ounces.
- When the ratio returns to a “normal” or historically low level, exchange silver back to gold — you now hold more gold ounces than you started with.
If you own physical metal, you can execute this trade by selling one and buying the other. If you hold ETFs, you can shift between SLV (silver) and GLD (gold).
The appeal is that you can potentially increase your metal holdings in ounce terms without needing the absolute price to rise. If you trade 1 oz of gold for 85 oz of silver at a ratio of 85, and the ratio later falls to 60, you can trade those 85 oz back for 1.41 oz of gold — a 41% increase in gold ounces, regardless of what the dollar price of either metal did.
The Limits
The ratio trade sounds clean in retrospect. In practice, it has several problems:
The ratio can stay high for a long time. If you moved to silver at a ratio of 80 expecting a reversion to 50, and the ratio went to 90 before eventually falling — you might wait years and endure significant volatility. “The ratio will revert” is a directional bet, not a timing tool.
Physical premiums muddy the math. When you actually buy and sell physical silver and gold, you pay premiums over spot and receive less than spot when selling. These transaction costs can eat significantly into the theoretical gains of a ratio trade, especially if silver premiums are elevated (as they often are during exactly the conditions that send the ratio high).
The ratio may have structurally shifted. Silver’s demonetization removed a structural demand floor. Industrial demand has partially replaced that, but it’s a different kind of demand — more cyclical, more tied to economic conditions. The “historical” 15:1 ratio reflects a world where silver was money. That world is gone. The ratio may simply trade at a permanently higher level than it once did.
The Bottom Line
The gold/silver ratio is a useful framing tool — it tells you, at a glance, whether silver is historically cheap or expensive relative to gold. It has a real track record as a mean-reverting series over long periods. But it’s not a timing indicator, and the “correct” long-run level is genuinely contested. Use it to orient your thinking, not to place a leveraged bet.
Sources
[1] U.S. Coinage Act of 1792 (fixing the U.S. bimetallic ratio at 15:1). (Primary historical source — widely reproduced in monetary history literature.)
[2] Roy W. Jastram, Silver: The Restless Metal (John Wiley & Sons, 1981). Long-run historical price data and ratio analysis.
[3] The Silver Institute / Metals Focus, World Silver Survey (annual). Supply/demand data relevant to ratio interpretation. silverinstitute.org