by Arkadiusz Sieron
We have debunked the myth that gold-to-silver ratio should revert to its “true” level around 16. The predominant range for the ratio in modern times is rather well between 40 and 80. Moreover, the notion that the gold-to-silver ratio should revert to some historical average makes no sense. The relative valuation between these two precious metals depends on market forces, like the health of the world economy and monetary demand for both metals, or industrial demand for silver. Such factors change over time. For example, gold has nowadays much higher monetary demand compared to silver than in the past, which largely explains why the average ratio in the 21st century was on average higher than earlier.