http://www.financialsense.com/node/4809
Many traders, speculators, and investors focus on the gold/silver price ratio in determining which metal is under or overvalued. In recent weeks and months the ratio has collapsed from above 65:1, down to a current low of around 36:1. Throughout the twentieth century, the gold/silver price ratio went to nearly 100:1, occasionally dipped below 30:1, and only briefly hit a ratio of 17:1 in 1980. But few seem to question how misleading this ratio may be, let alone question why the ratio matters for a monetary system that (for the time being at least) is no longer based on gold and silver.
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In short, if you are going to use gold/silver ratios, you may want to think about the possible relevance of other ratios:
9:1 is the ratio of silver to gold annual mine production
6:1 is the estimated ratio of economic gold to silver in the ground (USGS)
5:1 is the estimated physical ratio of all silverware, silver/gold jewelry and other stocks above ground (according to CPM Group)
1:1 is the year-to-date ratio of investment dollar demand.
1:3 (more silver than gold) is the physical ratio of gold and silver coins/bullion
These gold/silver ratios are not as familiar to traders, hedge fund managers, or the investing public. But I think that someday in the not so distant future they will be.
I won't post more of this very relevant and informative article in the post, it goes into far greater depth than that.
I recommend reading the article:
http://www.financialsense.com/node/4809