The Official Gold-Silver Ratio
There is much to be said by the army of armchair philosophers regarding the gold and silver ratio. One thing mentioned regularly in these circles is 16:1 (that is, 16 of ounces being equal to 1 ounce of gold). The significant in this particular ratio is its historical precedent. That is, before 1873, this was acknowledged by banks as silver’s de facto worth compared to gold and vice versa in the marketplace. The ratio has been as high as 99.67:1 from roughly the mid thirties to the mid forties, and came close to that number in the nineties. In 2011 we saw that ratio get down to 30:1.
Scant mentioned is the government’s official ratio. That’s right, the government indeed has an official ratio for gold-silver. Whilst in bullion shops, the new cafe, the official ratio is mistaken for the old official ratio of 16:1, the truth sits in plain sight.
An American Silver Eagle has a face value of one dollar. The American Gold Eagle, on the streets, has a face value of $50. These coins were authorized by Title II of Public Law 99-61 (Liberty Coin Act, approved July 9 1985) in which the origin of their face values lie.
The numbers are considered symbolic, but of what? In my opinion, this symbolism is the desired gold-silver ratio by the United States government. That is, not that one can receive 1 ounce of gold for 50 ounces of silver, but the numbers on each respective coin are somehow symbolic of this preferred relationship between the two metals. It could be that this ratio was picked due to its perceived attainability by command-and-control power wielders.
While I do not believe I have the answer, I do believe that in issues of governance, little is coincidence. As Franklin Delano Roosevelt once said, “In politics, nothing happens by accident.”