68Camaro wrote:Given that silver is undervalued now, while it was grossly overvalued in 1980, I'm not sure that the inflation ratio creates an accurate updated value. What matters more are all the other factors that have influenced price and value. A better representation might be the gold silver ratio, though there you also get to argue about which ratio is "correct". It is definitely too high now, upper 80s. But should a more correct ratio be 60, 40, 15 or some other number? I think most would agree that it should be at least 60 if not lower. At a gsr of 60, silver should be 50% higher than the current price, or $60 ish. At gsr of 30, silver would be about $120. At the current value of the dollar I think those are the upper and lower bounds for what the price of silver should be.
Silver in 1980 at $50 was a GSR of 15, but then gold fell too.
Silver occurs in the Earth's crust in a ratio to gold of about 15:1, and silver was exchangeable to gold at a ratio of about 15:1 under the coinage act of 1792. For most of history, it was exchangeable for gold at 12:1, and then 15-16 to 1 after the discovery of large amounts of silver in the New World.
I'm not making a forecast, just explaining that there is a basis for 15. To make a forecast, one would have to understand why the GSR hasn't been at 15 for the past 100 years except briefly. Manipulation? The fact that silver hasn't been a monetary metal in the U.S. since 1964, and many other countries since the 1870s?
Most central banks hold gold, not silver, because silver is too bulky, difficult to move, and store. Interesting, an electronic form of money that I won't name eclipsed silver in global market value recently, perhaps because its not bulky and easy to store and move. Perhaps this is why the price of silver has not kept up with inflation while other assets are beathing inflation?
