The historical ratio between gold and silver, also known as the Au/Ag ratio, expresses how many ounces of silver are required to purchase one ounce of gold. This ratio is watched by investors and analysts as an indicator of the mutual value of these two precious metals.
The historical ratio of gold to silver has moved in different ranges over time. Historically, the ratio has ranged from 15:1 (15 ounces of silver to one ounce of gold) to 100:1 (100 ounces of silver to one ounce of gold).
The price of gold and silver varies and can change depending on various factors such as demand, supply, economic conditions and geopolitical events. These factors can also influence mining companies' decisions about which metal to mine and invest in.
Factors affecting the ratio:
1. Gold is more precious than silver. The total amount of gold mined is much less than the amount of silver mined. This causes gold to be in supply and more rare, leading to a higher price.
2. Gold mining and processing is more difficult and expensive compared to silver. Mining requires special technologies and equipment, which increases the cost of obtaining it.
3. Gold is seen as a traditional reserve of value and protection against inflation. It has a long history as a store of value. Silver is also considered a valuable metal, but its value is more influenced by industrial use.
It is important to remember that when deciding whether to invest in gold or silver, you should not only have favorable price ratios, but also other factors such as your investment objectives, risk profile, price status of both metals and current market conditions.
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