Gold / Silver Ratio

What Is the Gold/Silver Ratio?

The Gold/Silver Ratio (GSR) measures how many ounces of silver are required to purchase one ounce of gold. It is a widely followed, simple way to compare the prices of the two metals.

Under historical bimetallic standards, governments fixed the ratio by law. Since gold and silver have traded freely, the ratio has moved over a wide range, typically rising during periods of financial stress, when demand for gold as a safe haven outpaces demand for industrially sensitive silver.

💡 The US Coinage Act of 1792 fixed the gold/silver ratio at 15:1 by law. Such legally fixed ratios repeatedly broke down as the market prices of the two metals drifted apart.

How to Interpret the Ratio

• The ratio tends to rise in risk-off environments: gold usually outperforms silver during crises, as investment demand outweighs industrial demand
• The ratio tends to fall in risk-on, high-growth environments, when silver's industrial demand supports its price
• The ratio only compares the two metals with each other; it does not say whether either metal is cheap or expensive in absolute terms