Silver Coin Commerce™

Silver/Gold Ratio

…and why you should care.

In 1840 the Gold/Silver Ratio was 15.5, or 1:15.5. As an example:If one ounce of silver cost $1.29 and an ounce of gold would cost $20.00, you would need 15.5 ounces of silver to exchange for one ounce of gold. Or, conversely, one ounce of gold could be traded for 15.5 ounces of silver.

It is interesting to note that a few decades earlier in 1792 the gold/silver ratio was fixed by law in the U.S. at 1:15. And then in 1837 it was re-established by U.S. Congress at 1:16. However, in 1873 silver was demonetized leaving gold as the sole standard of the nation’s currency.

Other historical records:

323 B.C. – The ratio stood at 12.5 upon the death of Alexander the Great.
Roman Empire – Set the ratio at 12.
1980 – Previous surge in gold and silver prices had the ratio at 17.
1991 – Silver hits lows, ratio peaked at 100.
2007 – Average for the entire year was 51.

You can see from the above graphic that since silver was demonetized, the gold/silver ratio has had some pretty wild fluctuations. One thing that overwhelmingly draws your attention is that silver never again hits the 15/16 to one (for gold) range.

As of this writing: Silver is 28.69 and gold is 1370.80 which would mean that today, the ratio would be 1:47.77, or one ounce of gold equals 48-ish ounces of silver.

Getting back to why you should care, and maybe why you shouldn’t.

If you’re interested in amassing more metal then you might care, because you can watch the spikes and trade accordingly. These types of trades, however, may not procure more dollar-value profits as this is not a primary reason for engaging in the practice. Quantity, over quality, so to speak, the relative value of the metal is considered unimportant.

An example: A trader watches the ratio spike to 1:75, gold is sold and silver purchased at this ratio and then the trader waits until the ratio comes back down and reverses the process selling his silver to buy more gold than he had previously.

Not a bad way to go, but you will have to exercise patience.

In today’s world, and as we’ve highlighted in many of our articles here at Silver Coin Commerce™, silver’s industrial use is trending upward, but as this demand increases, so shall mining and refining. Will this stabilize prices? Will this stabilize the gold/silver ratio? As you can see from the above illustration the silver/gold ratio is all over the place in the larger timeline creating prime opportunities for speculative [and patient] investing.

Sources:
Wikipedia – image
Investopedia
GoldAlert – image

Pete Skenandore

Euro gold and silver commemorative coins are special euro coins minted and issued by member states of the Eurozone. They are minted mainly in gold and silver, although other precious metals are also used on rare occasions. Austria was one of the first twelve countries in the Eurozone to introduce the euro (€), on 1 January 2002. Since then, the Austrian Mint has been minting both normal issues of Austrian euro coins (which are intended for circulation) and commemorative euro coins in gold and silver.

These commemorative coins are legal tender only in Austria, unlike the normal issues of the Austrian euro coins, which are legal tender in every country of the Eurozone. This means that the commemorative coins made of gold and silver cannot be used as money in other countries. Furthermore, as their bullion value generally vastly exceeds their face value, these coins are not intended to be used as means of payment at all—although this remains possible where they are also legal tender. For this reason, they are usually named Collectors’ coins.

Such coins usually commemorate the anniversaries of historical events. They can also draw attention to current events of special importance. Austria mints more than ten of these coins on average per year, in gold, silver and niobium, with face values ranging from €1.50 to €100 (though, as an exceptional case, 15 coins with face value €100,000 were minted in 2004).

Summary

As of  2008, eighty variations of Austrian commemorative coins had been minted: eleven in 2002, twelve in 2003, fourteen in 2004, thirteen in 2005, thirteen in 2006, nine in 2007 and eleven in 2008. These special high-value commemorative coins are not to be confused with €2 commemorative coins, which are coins designated for circulation and have legal-tender status in all countries of the Eurozone.

The Vienna Philharmonic coin is struck in pure gold, 999.9 fine (24 karats). It is issued every year, in four different face values, sizes and weights. It is used as an investment product (bullion coin), although it inevitably ends up in private collections. According to the World Gold Council, it was the best-selling gold coin worldwide in 1992, 1995 and 1996.

A design of musical instruments representing the Vienna Philharmonic Orchestra, as well as the text Wiener Philharmoniker (“Vienna Philharmonic”), can be seen on the reverse of the coin.

The subject of the obverse is the great organ in the Golden Hall in Vienna’s Musikverein, the concert hall of the Vienna Philharmonic Orchestra. The face value in euros, the weight, alloy purity and year of issue are also inscribed on this side of the coin.

Since 1 February 2008, the coin has also been minted in silver. The design of the silver coin is identical to that of the gold coin, except for its face value of 1.50 euro.

ArminVoigt                                                                                                                                                                                                                                                                                                                                                                                                                        Via ProBlogPartners™       

References

1. Austrian Mint. http://austrian-mint.at/cms/start.php

There is a new bill being discussed in the Idaho State House of Representatives that, if passed into law, would legitimize the trading of gold and silver for merchandise. This bill is Idaho House bill #622 and it has been linked for all of those that like to read legalese.

http://www.legislature.idaho.gov/legislation/2010/H0622.pdf

The gist of the bill is that it would enable the people of Idaho to trade gold or silver for merchandise whether it be in the form of coins, bullion, or electronic ounces.

Negative view:

A local news channel did a segment on this proposed bill that did not do it justice. Several comments on the segment considered it a hit piece, but the content of the following video shows just how unwilling people are to sacrifice a little convenience, even if the trade-off  is ability to use sound money rather than a fiat currency.

http://www.localnews8.com/Global/story.asp?S=12113990

Positive view:

On the other hand, we have a guy in California that did video back in June of 2009, notice that gold was only $950/oz , showing how to do a transaction with silver at convenience store in a positive perspective.

http://www.youtube.com/watch?v=7IfyXyu7xNI

It is the sworn duty of every state legislator to support the U.S. Constitution and I am glad that some of current occupants of the Idaho state legislature see it that way.

Here are the rules:

Article 6, Clause 3 of the U.S. Constitution states: “…members of the several state legislatures…shall be bound by oath or affirmation, to support this Constitution…”

And, Article 1, Section 10, Clause 1 states: “No state shall…coin money; emit bills of credit; make anything but gold and silver coin a tender in payment of debts;…”

And, Article 1, Section 3 of the Constitution of the State of Idaho states: “…the Constitution of the United States is the supreme law of the land.”

Reference:

Idaho HB 622: The Rule of Law