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Charting the Gold-to-Silver Ratio Over 200 Years

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Charting 200 Years of the Gold-to-Silver Ratio

Gold and silver have been precious and monetary metals for millennia, with the gold-to-silver ratio having been measured since the days of Ancient Rome.

Historically, the ratio between gold and silver played an important role in ensuring coins had their appropriate value, and it remains an important technical metric for metals investors today.

This graphic charts 200 years of the gold-to-silver ratio, plotting the pivotal historical events that have shaped its peaks and valleys.

What is the Gold-to-Silver Ratio?

The gold-to-silver ratio represents the amount of silver ounces equivalent to a single ounce of gold, enabling us to see if one of the two precious metals is particularly under or overvalued.

Currently, the ratio sits at about 80 ounces of silver equivalent to one ounce of gold. This is after the ratio spiked to new highs of 123.3 during the COVID-19 pandemic.

While gold is primarily viewed as an inflation and recession hedge, silver is also an industrial metal and asset. The ratio between the two can reveal whether industrial metals demand is on the rise or if an economic slowdown or recession may be looming.

The History of the Gold-to-Silver Ratio

Long before the gold-to-silver ratio was allowed to float freely, the ratio between these two metals was fixed by empires and governments to control the value of their currency and coinage.

The earliest recorded instance of the gold-to-silver ratio dates back to 3200 BCE, when Menes, the first king of Ancient Egypt set a ratio of 2.5:1. Since then, the ratio has only seen gold’s value rise as empires and governments became more familiar with the scarcity and difficulty of production for the two metals.

Gold and Silver’s Ancient Beginnings

Ancient Rome was one of the earliest ancient civilizations to set a gold-to-silver ratio, starting as low as 8:1 in 210 BCE. Over the decades, varying gold and silver inflows from Rome’s conquests caused the ratio to fluctuate between 8-12 ounces of silver for every ounce of gold.

By 46 BCE, Julius Caesar had established a standard gold-to-silver ratio of 11.5:1, shortly before it was bumped to 11.75:1 under emperor Augustus.

As centuries progressed, ratios around the world fluctuated between 6-12 ounces of silver for every ounce of gold, with many Middle Eastern and Asian empires and nations often valuing silver more highly than Western counterparts, thus having a lower ratio.

The Rise of the Fixed Ratio

By the 18th century, the gold-to-silver ratio was being redefined by the U.S. government’s Coinage Act of 1792 which set the ratio at 15:1. This act was the basis for U.S. coinage, defining coins’ values by their metallic compositions and weights.

Around the same time period, France had enacted a ratio of 15.5:1, however, neither of these fixed ratios lasted long. The growth of the industrial revolution and the volatility of two world wars resulted in massive fluctuations in currencies, gold, and silver. By the 20th century, the ratio had already reached highs of around 40:1, with the start of World War II further pushing the ratio to a high of nearly 100:1.

Recently in 2020, the ratio set new highs of more than 123:1, as pandemic fears saw investors pile into gold as a safe-haven asset. While the gold-to-silver ratio has since fallen to roughly 80:1, runaway inflation and a potential recession has put gold in the spotlight again, likely bringing further volatility to this historic ratio.

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Charted: 30 Years of Central Bank Gold Demand

Globally, central banks bought a record 1,136 tonnes of gold in 2022. How has central bank gold demand changed over the last three decades?

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30 Years of Central Bank Gold Demand

Did you know that nearly one-fifth of all the gold ever mined is held by central banks?

Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.

However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.

The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.

Why Do Central Banks Buy Gold?

Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:

  • Balancing foreign exchange reserves
    Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil.
  • Hedging against fiat currencies
    Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation.
  • Diversifying portfolios
    Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.
  • The Switch from Selling to Buying

    In the 1990s and early 2000s, central banks were net sellers of gold.

    There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.

    Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.

    Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:

    Rank CountryAmount of
    Gold Bought (tonnes)
    % of
    All Buying
    #1🇷🇺 Russia 1,88828%
    #2🇨🇳 China 1,55223%
    #3🇹🇷 Türkiye 5418%
    #4🇮🇳 India 3956%
    #5🇰🇿 Kazakhstan 3455%
    #6🇺🇿 Uzbekistan 3115%
    #7🇸🇦 Saudi Arabia 1803%
    #8🇹🇭 Thailand 1682%
    #9🇵🇱 Poland1282%
    #10🇲🇽 Mexico 1152%
    Total5,62384%

    Source: IMF

    The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.

    Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.

    Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.

    Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.

    Which Central Banks Bought Gold in 2022?

    In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.

    Country2022 Gold Purchases (tonnes)% of Total
    🇹🇷 Türkiye14813%
    🇨🇳 China 625%
    🇪🇬 Egypt 474%
    🇶🇦 Qatar333%
    🇮🇶 Iraq 343%
    🇮🇳 India 333%
    🇦🇪 UAE 252%
    🇰🇬 Kyrgyzstan 61%
    🇹🇯 Tajikistan 40.4%
    🇪🇨 Ecuador 30.3%
    🌍 Unreported 74165%
    Total1,136100%

    Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.

    Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.

    According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.

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Which Countries Have the Lowest Inflation?

Just four economies around the world had inflation below 2% in 2022.

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Which Countries Have the Lowest Inflation?

Investors are bracing for longer inflation.

The Federal Reserve indicated that more restrictive monetary policy is in the cards amid strong employment gains. In Europe, while inflation has fallen, it is still far above the 2% target. Across the Euro area inflation is estimated to have reached 8.5% in January.

At the same time, some countries have managed to tamp down inflation. Slower growth, cheaper import costs, and foreign exchange policy are some of the factors keeping inflation subdued.

As price pressures rattle global markets, the above infographic maps inflation rates globally using data from Trading Economics, focusing in on the countries with the lowest inflation levels.

World’s Lowest Inflation Rates

Many of the lowest inflation rates around the world are located in Asia, including Macau, China, Hong Kong, and Taiwan. In this region, widespread lockdowns strained growth and consumer spending, lessening inflationary pressures. Last year, Chinese consumers saved $2.2 trillion in bank deposits during these restrictions which were lifted earlier this year.

Inflation in the region was impacted by several other factors. Earlier on in the pandemic, Asian countries including China were less impacted by rising food costs, services inflation, and supply-chain disruptions, unlike what was seen in North America and Europe.

But now as China has reopened, some signs of inflation are beginning to appear. Food prices are up 4.8% annually in December, and hotel rates are rising.

RankCountry / RegionInflation Rate, Year-Over-YearDate
1🇸🇸 South Sudan-11.6%Dec 2022
2🇲🇴 Macau 0.8%Nov 2022
3🇨🇳 China1.8%Dec 2022
4🇭🇰 Hong Kong SAR1.8%Nov 2022
5🇴🇲 Oman2.1%Nov 2022
6🇵🇦 Panama2.1%Dec 2022
7🇸🇨 Seychelles2.5%Dec 2022
8🇻🇺 Vanuatu2.7%Mar 2022
9🇹🇼 Taiwan2.7%Dec 2022
10🇨🇭 Switzerland2.8%Dec 2022
11🇱🇮 Liechtenstein2.8%Dec 2022
12🇧🇯 Benin2.8%Dec 2022
13🇲🇻 Maldives2.8%Nov 2022
14🇳🇪 Niger3.1%Dec 2022
15🇧🇳 Brunei3.1%Nov 2022
16🇧🇴 Bolivia3.2%Nov 2022
17🇰🇼 Kuwait3.2%Nov 2022
18🇸🇦 Saudi Arabia3.3%Dec 2022
19🇰🇭 Cambodia3.6%Oct 2022
20🇫🇯 Fiji3.6%Dec 2022
21🇪🇨 Ecuador3.7%Dec 2022
22🇯🇵 Japan3.8%Nov 2022
23🇱🇾 Libya3.8%Nov 2022
24🇧🇲 Bermuda3.8%Oct 2022
25🇧🇭 Bahrain3.9%Nov 2022
26🇲🇾 Malaysia4.0%Nov 2022
27🇵🇸 Palestine4.1%Dec 2022
28🇮🇶 Iraq4.2%Nov 2022
29🇯🇴 Jordan4.4%Dec 2022
30🇹🇯 Tajikistan4.5%Nov 2022
31🇻🇳 Vietnam4.6%Dec 2022
32🇧🇹 Bhutan4.6%Nov 2022
33🇹🇿 Tanzania4.8%Dec 2022
34🇳🇨 New Caledonia4.9%Dec 2022
35🇰🇷 South Korea5.0%Dec 2022
36🇮🇱 Israel5.3%Dec 2022
37🇱🇺 Luxembourg5.4%Dec 2022
38🇸🇿 Swaziland5.5%Oct 2022
39🇮🇩 Indonesia5.5%Dec 2022
40🇬🇦 Gabon5.7%Oct 2022
41🇨🇮 Ivory Coast5.7%Nov 2022
42🇪🇸 Spain5.7%Dec 2022
43🇮🇳 India5.7%Dec 2022
44🇧🇷 Brazil5.8%Dec 2022
45🇹🇭 Thailand5.9%Dec 2022
46🇫🇷 France5.9%Dec 2022
47🇳🇴 Norway5.9%Dec 2022
48🇶🇦 Qatar5.9%Dec 2022
49🇩🇯 Djibouti6.1%Sep 2022
50🇸🇴 Somalia6.1%Dec 2022
51🇹🇹 Trinidad and Tobago6.2%Sep 2022
52🇵🇬 Papua New Guinea6.3%Sep 2022
53🇵🇷 Puerto Rico6.3%Nov 2022
54🇨🇦 Canada6.3%Dec 2022
55🇧🇸 Bahamas6.5%Sep/22
56🇧🇿 Belize6.5%Nov 2022
57🇺🇸 U.S.6.5%Dec 2022
58🇦🇼 Aruba6.6%Nov 2022
59🇸🇬 Singapore6.7%Nov 2022
60🇹🇱 East Timor6.7%Nov 2022
61🇦🇪 UAE6.8%Jun 2022
62🇳🇦 Namibia6.9%Dec 2022
63🇬🇾 Guyana6.9%Nov 2022
64🇳🇿 New Zealand7.2%Sep 2022
65🇿🇦 South Africa7.2%Dec 2022
66🇬🇷 Greece7.2%Dec 2022
67🇱🇷 Liberia7.2%Sep 2022
68🇦🇺 Australia7.3%Sep 2022
69🇲🇹 Malta7.3%Dec 2022
70🇸🇻 El Salvador7.3%Dec 2022
71🇦🇱 Albania7.4%Dec 2022
72🇨🇻 Cape Verde7.6%Dec 2022
73🇨🇲 Cameroon7.7%Sep 2022
74🇨🇫 Central African Republic7.7%Nov 2022
75🇹🇬 Togo7.7%Dec 2022
76🇲🇽 Mexico7.8%Dec 2022
77🇩🇴 Dominican Republic7.8%Dec 2022
78🇨🇷 Costa Rica7.9%Dec 2022
79🇨🇾 Cyprus7.9%Dec 2022
80🇲🇱 Mali8.0%Nov 2022
81🇳🇵 Nepal8.1%Nov 2022
82🇵🇭 Philippines8.1%Dec 2022
83🇵🇾 Paraguay8.1%Dec 2022
84🇧🇧 Barbados8.2%Oct 2022
85🇮🇪 Ireland8.2%Dec 2022
86🇺🇾 Uruguay8.3%Dec 2022
87🇲🇦 Morocco8.3%Nov 2022
88🇦🇲 Armenia8.3%Dec 2022
89🇵🇪 Peru8.5%Dec 2022
90🇱🇸 Lesotho8.5%Oct 2022
91🇩🇿 Algeria8.6%Nov 2022
92🇩🇪 Germany8.6%Dec 2022
93🇩🇰 Denmark8.7%Dec 2022
94🇧🇩 Bangladesh8.7%Dec 2022
95🇫🇴 Faroe Islands8.8%Sep 2022
96🇫🇮 Finland9.1%Dec 2022
97🇰🇪 Kenya9.1%Dec 2022
98🇰🇾 Cayman Islands9.2%Sep 2022
99🇬🇹 Guatemala9.2%Dec 2022
100🇬🇼 Guinea Bissau9.4%Nov 2022

*Inflation rates based on latest available data.

Globally, one outlier is South Sudan. Political instability and violence have depressed growth and inflation, which stood at -11.6% in December. As it faces a severe humanitarian crisis, the country has the lowest inflation rate worldwide.

Oil-producing nation Oman has also seen low inflation, at 2.1%. One reason for this is that the Omani rial is pegged to the U.S. dollar, keeping the currency anchored. Inflation has remained moderate over the last decade in the country.

The Country With the Lowest Inflation, by Region

In Europe, Switzerland has the lowest inflation rate, at 2.8%, or roughly one-third of the Euro area’s. It is also the lowest rate in the OECD. The country’s strong currency has shielded it from inflationary pressures and high import prices.

Meanwhile, Swiss production prices have risen marginally above inflation, to 4.1% annually in mid-2022. Last year, the Swiss central bank raised interest rates for the first time since 2007 from -0.75% to -0.25% following 20 years of deflation.

Countries With the Lowest Inflation by Region

Panama has the lowest rate in Latin America. The dollarization of the Panamanian balboa has helped quash price pressures. In July, the government regulated the price of 72 items to keep the cost of living from rising after three weeks of protests as inflation climbed as high as 5.2% during the course of 2022.

With the lowest inflation in Asia, Macau witnessed the tourism industry fall off a cliff given lockdown measures, and the economy saw both its GDP and inflation collapse in 2022. Its real GDP is projected to have fallen close to 30% for the year.

Future Gazing

The IMF estimates that 84% of countries around the world will have lower inflation than last year. By 2024, both headline and core inflation are projected to remain above pre-pandemic levels at 4.1%.

Opposing forces of China’s reopening and weaker global growth could offset inflationary pressures, yet this interplay—among a host of other factors—remains to be seen.

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