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Charting the Gold-to-Silver Ratio Over 200 Years

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God to silver ratio

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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Explained: India’s Gold Demand During Diwali

Why do Indians buy gold during Diwali?

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india's gold demand during diwali

India’s Gold Demand During Diwali

In India, gold’s significance goes far beyond investment and jewelry. The yellow metal is woven into India’s cultural history and is revered by a population of over 1.3 billion.

India is one of the largest markets for gold consumption, with jewelry, bars, and coins accounting for the bulk of annual demand. Indian gold demand typically peaks between October and December on the back of Diwali, the festival of lights, followed by thousands of weddings.

But why do Indians buy gold during Diwali?

Gold’s Significance During Diwali

Indians consider it auspicious to purchase gold—a symbol of wealth, purity, and prosperity—on many festive occasions, and Diwali is the biggest one of them.

Diwali is a five-day festival that celebrates the triumph of good over evil and light over darkness, based on Hindu mythology. For many Indians, this festival is associated with welcoming good luck, positivity, and prosperity.

People often dedicate gold purchases during Diwali to deities, especially Lakshmi, the goddess of wealth. Gold is also a popular festive and wedding gift at this time of the year.

India’s Record Gold Demand in Diwali 2021

India’s gold consumption in the second half of every year is typically higher than in the first half, coinciding with Diwali in October (beginning of Q4), according to data from the World Gold Council.

YearGold Jewelry, Bar, and Coin Demand
(tonnes)
YoY % Change
H1 2010447N/A
H2 2010555N/A
H1 201159032.1%
H2 2011384-30.8%
H1 2012404-31.5%
H2 201251032.7%
H1 201355737.9%
H2 2013402-21.3%
H1 2014370-33.5%
H2 201446315.3%
H1 2015350-5.5%
H2 20155079.5%
H1 2016229-34.5%
H2 2016437-13.9%
H1 201736358.4%
H2 2017408-6.6%
H1 2018341-6.2%
H2 20184202.9%
H1 20193729.2%
H2 2019318-24.2%
H1 2020166-55.5%
H2 2020281-11.8%
H1 202128572.3%
H2 202151282.3%
H1 20223067.3%

Following a significant drop in demand in 2020, Indians bought a record amount of gold jewelry in Q4 2021 at 265 tonnes, worth $15.3 billion at the time. Overall, gold jewelry, bar, and coin demand in H2 2021 saw an 82% increase year-over-year.

This increase was largely driven by the festive season and pent-up demand from subdued celebrations and consumption in 2020. As of the first half of 2022, gold demand was up 7.3% relative to 2021.

With Diwali celebrations in full swing, will India see another record quarter for gold demand? It remains to be seen, with gold’s festive tailwinds likely to meet economic headwinds in the form of uncertainty and higher import duties.

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All the Metals We Mined in 2021 in One Visualization

See the 2.8 billion tonnes of metals mined in 2021.

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all the metals mined in 2021

All the Metals We Mined in 2021

“If you can’t grow it, you have to mine it” is a famous saying that encapsulates the importance of minerals and metals in the modern world.

From every building we enter to every device we use, virtually everything around us contains some amount of metal.

The above infographic visualizes all 2.8 billion tonnes of metals mined in 2021 and highlights each metal’s largest end-use using data from the United States Geological Survey (USGS).

Why Do We Mine So Much Iron Ore?

Iron ore accounted for 93% of the metals mined in 2021, with 2.6 billion tonnes extracted from the ground. It’s important to note that this is ore production, which is typically higher than metal production since metals are extracted and refined from ores.

Metal/Ore2021 Mine Production (tonnes)% of Total
Iron ore2,600,000,00093.4%
Industrial metals181,579,8926.5%
Technology and precious metals1,474,8890.05%
Total2,783,054,781100%

With 98% of it converted into pig iron to make steel, iron ore is ubiquitous in our lives. Steel made from iron ore is used in construction, transportation, and household appliances, and it’s likely that you encounter something made out of it every day, especially if you live in a city.

Due to its key role in building infrastructure, iron ore is one of the most important materials supporting urbanization and economic growth.

Industrial Metals

Industrial metals are largely used in steelmaking, construction, chemical manufacturing, and as alloying agents. In 2021, the world mined over 181 million tonnes of these metals.

Industrial Metals2021 Mine Production (tonnes)% of Total
Aluminum*68,000,00037.4%
Chromium41,000,00022.6%
Copper21,000,00011.6%
Manganese20,000,00011.0%
Zinc13,000,0007.2%
Titanium (mineral concentrates)9,000,0005.0%
Lead4,300,0002.4%
Nickel2,700,0001.5%
Zirconium Minerals (Zircon)1,200,0000.7%
Magnesium*950,0000.5%
Strontium360,0000.2%
Uranium48,3320.03%
Bismuth*19,0000.01%
Mercury2,3000.001%
Beryllium2600.0001%
Total181,579,892100.0%

*Represents refinery/smelter production.

Aluminum accounted for nearly 40% of industrial metal production in 2021. China was by far the largest aluminum producer, making up more than half of global production. The construction industry uses roughly 25% of annually produced aluminum, with 23% going into transportation.

Chromium is a lesser-known metal with a key role in making stainless steel stainless. In fact, stainless steel is usually composed of 10% to 30% of chromium, enhancing its strength and corrosion resistance.

Copper, manganese, and zinc round out the top five industrial metals mined in 2021, each with its own unique properties and roles in the economy.

Technology and Precious Metals

Technology metals include those that are commonly used in technology and devices. Compared to industrial metals, these are usually mined on a smaller scale and could see faster consumption growth as the world adopts new technologies.

Technology and Precious Metals2021 Mine Production (tonnes)% of Total
Tin300,00020.3%
Molybdenum300,00020.3%
Rare Earth Oxides280,00019.0%
Cobalt170,00011.5%
Vanadium110,0007.5%
Lithium106,0007.2%
Tungsten79,0005.4%
Niobium75,0005.1%
Silver24,0001.6%
Cadmium24,0001.6%
Gold3,0000.2%
Tantalum2,1000.1%
Indium*9200.1%
Gallium4300.03%
Platinum Group Metals3800.03%
Rhenium590.004%
Total1,474,889100%

*Represents refinery/smelter production.

The major use of rhenium, one of the rarest metals, is in superalloys that are critical for engine turbine blades in aircraft and gas turbine engines. The petroleum industry uses it in rhenium-platinum catalysts to produce high-octane gasoline for vehicles.

In terms of growth, clean energy technology metals stand out. For example, lithium production has more than doubled since 2016 and is set to ride the boom in EV battery manufacturing. Over the same period, global rare earth production more than doubled, driven by the rising demand for magnets.

Indium is another interesting metal on this list. Most of it is used to make indium tin oxide, an important component of touchscreens, TV screens, and solar panels.

The Metal Mining Megatrend

The world’s material consumption has grown significantly over the last few decades, with growing economies and cities demanding more resources.

Global production of both iron ore and aluminum has more than tripled relative to the mid-1990s. Other metals, including copper and steel, have also seen significant consumption growth.

Today, economies are not only growing and urbanizing but also adopting mineral-intensive clean energy technologies, pointing towards further increases in metal production and consumption.

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