Comment: Just a ratio

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Cyril's picture

Just a ratio

It's very simply the ratio of the amount of silver, say, in ounces, that buys you exactly one ounce of gold (to use the same unit).

Let's say gold is at $1,500 an ounce and silver is at $50 an ounce (spot prices), then:

Gold/Silver Ratio = 1,500 / 50 = 30 / 1

Also written : GSR = 30:1 ("thirty to one")

In other words, at spot prices, you can only hope to exchange not less than 30 ounces of silver for ounce of gold.

The lower the ratio is, the better it is for silver holders to convert a part of their silver into gold (*).

Or, equivalently, of course:

The higher the ratio is, the better it is for gold holders to convert a part of their gold into silver (*).

Makes sense?

Hence, the video, depicting the notion.

'HTH,

(*) if they so wish

"Cyril" pronounced "see real". I code stuff.

http://Laissez-Faire.Me/Liberty

"To study and not think is a waste. To think and not study is dangerous." -- Confucius