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What Is Worth More: Gold or Silver?
By Victor Rosario MONEY RESEARCH COLLECTIVE
Gold and silver have consistently been sought-after products for those looking to invest in precious metals. The two commodities have had an interconnected relationship since ancient times and, more recently, have become a popular tool to hedge against inflation. Each commodity has unique benefits that may interest investors in different ways.
Read on to learn more about the correlation between the value of gold and silver, the different reasons to invest in them and the historical context between the two commodities.
What is worth more: gold or silver?
Historically, gold has always been worth more than silver. Silver deposits are almost 20 times as common as gold deposits, which, together with other factors, keeps the price of silver lower than gold. The price gap between the two tends to vary, although the spot prices of both precious metals tend to spike and drop together, a relationship known as the gold-silver ratio.
The gold-silver ratio
The gold-silver ratio is the relationship between the prices of the two precious metals. More accurately, it is the ratio by which gold is worth more than silver. The gold-silver ratio has been kept track of since ancient times and is the oldest continuously tracked exchange rate in history. The ratio between gold and silver in the Earth’s crust is 1:19, but economic ratios have varied throughout the years.
In Ancient Rome, the gold-silver ratio was established at 12:1. In more recent times, the United States established the gold-silver ratio by law as 15:1, which made one troy ounce of gold worth 15 troy ounces of silver. This was defined in the Coinage Act of 1792, the same act that established the U.S. dollar. Other coinage acts throughout the years raised the gold-silver ratio, and the average ratio throughout the 20th century was closer to 47:1.
Current price of gold and silver
As of January 2025, the current gold-silver ratio is 88:1. This means that one troy ounce of gold is equivalent to 88 troy ounces of silver. The price of both gold and silver fluctuates based on a number of factors, including inflation, which often drives up the price of precious metals as they are used as a wedge against the dollar.
The 80/50 rule
One of the many ways people invest in precious metals follows a trading strategy known as the 80/50 rule. The strategy involves changing your investments from silver to gold when the gold-silver ratio falls below 50, and switching it back to silver when the ratio rises above 80. The strategy is often used to diversify a portfolio and reduce the risk of exposure in your investments.
Ways to invest in gold and silver
There’s more than one way to invest in precious metals. Although you can buy gold and silver directly from precious metals dealers, it’s more common to invest in gold and silver through financial instruments that can help avert the risk of buying it physically. Many of these financial instruments can be bought through traditional brokers.
Gold and silver ETFs
A precious metal exchange-traded fund invests in gold or silver bullion and aims to track the price of these precious metals. These funds can be traded on exchanges, essentially turning the running price of the precious metal, whether it be gold or silver, into a stock you can buy, sell and trade.
Mutual funds
Similar to ETFs, mutual funds based on precious metals can buy multiple precious metal products such as gold, silver, palladium and platinum. These funds can also buy stocks in companies in the precious metals industry. While ETFs can be traded throughout the day, mutual funds, as an amalgamation of different products, must be traded at the end of the day.
Gold and silver IRAs
You can use precious metals to divest your individual retirement account and hedge your retirement funds against inflation. Unlike ETFs and mutual funds, IRAs allow you to physically own the precious metal you have invested in, whether it’s gold or silver. IRAs have tax benefits and, as such, have contribution limits to how much you can invest in the precious metal you’re looking to buy ($7,000, or $8,000 if you’re 50 years or older).
Summing Up What’s Worth More: Gold or Silver
While gold has always been worth more than silver, there are various reasons to invest in both precious metals. The two metals’ prices have had a relationship since ancient times and many modern investors use both to divest their investments and hedge against inflation. There are also many ways to invest in both metals, whether it’s by buying the physical products themselves or financial instruments that track their growth.
All in all, gold and silver are two of the most well-known commodities in the world and their inverse relationship to the US dollar all but assures it will be a common investment in the years ahead.