The question of “Will Silver Prices Ever Match Those Of Gold?” is asked occasionally, particularly by people new to precious metal investing. As a commodity like any other the laws of “supply and demand” control the value of silver in comparison to other commodities, gold included. Since most larger countries have moved off the Silver Standard which held the monetary value as a fixed weight of silver, the value has become more volatile. The current major uses of silver are in bullion coinage, electronics, and jewelry. The recent use of silver as a component on computers and cell phones has driven up its value as a commodity making its value higher.
In ancient Egypt silver was more rare and thus more valuable than gold. But once more silver was located in the ancient world, and the smelting processes to refine it were better developed, the value fell. The ratio of silver to gold in value was originally set in a the far past in ancient Roman times at 12:1. In America in 1792, the value was set at 15:1 by law. However, the average value of silver to gold in the 20th century was a much wider ratio 47:1 where it would take 47 troy ounces of silver to equal one of gold in value. The current value is a whopping 59:1 ratio of silver to gold.
However, this ratio is subject to changes in the commodities market. A new industrial use of silver could drive up the price. A decline in the supply due to war or some other reduction of supply could also raise value. An increase in the purchase of silver bullion can also drive prices higher. Because the silver commodities market is much smaller than the gold trading market, the influence of a few key investors is more quickly felt. . A huge scandal ensued in the silver market 1973 when the Hunt Brothers cornered the market in silver bringing its value to the highest in the last 100 years of 15:1. When the Federal Reserve intervened and put and end to this game the price fell again due to more natural market forces. More recently, investors like Morgan Stanley and Warren Buffet have personally affected silver values by buying large quantities at one time
So will we ever see silver match gold in value?
Most likely not unless some thing happens which uses so much silver thus taking it off the market and raising its value. What could do this? Investors could buy up large reserves and hold them like the Hunt Brothers in the 1970’s. A new industrial technique that requires exclusive use of silver could raise demand and thus cause silver to increase in value. Because it is such a good conductor of electricity a new use in the electronics industry is a strong possibility. Because of this potential future in industrial and electronic development a new investor may wish to invest in silver as a way to enter the market to purchase precious metals as an investment. It would require a much lower level of capital. Ask your investment broker for advice on this matter.