L out of luck. And one person actually can claim that real ounce, the rest of the con. And so
the only way that these types of things resolve is through crisis and an explosion in price.
Hi, it's Mike and Alan again. And this video is about the absurd, ridiculous, absolutely insane
undervaluation of silver. What have you got? Does that make sense to you?
Yeah, absolutely, especially when we put it in a historical context. And that's exactly what this
video is about. So really, it's all about the gold-silver ratio throughout history. We can see
from the last 5,000 years that there is a particular range that this ratio tended to fall in.
Lately, the last few decades, we are so far outside that range that it's hard to fathom
how we even got there. But we're certainly going to have to revert sooner rather than later.
Yeah, actually, it's more like a century and a half really that it's been out of whack.
Yeah, I guess it depends. We're going to see all the dates and we can talk about it. So it
depends what you think is normal or not and so forth. So it's hopefully a healthy discussion
here. Take it away. All right, perfect. What I wanted to start with is this
infographic that has been circulating around Twitter lately, the gold-to-silver ratio through
history. And you can see that back in ancient Egypt, the ratio was single digits, 1 to 2,
1 to 3, 1 to 10, something like that, or sometimes we say 10 to 1, 10 to 3.
And it sort of hovered around 15 to 1, something like that throughout the last 5,000 years,
for most of it. And today, we're living in Clown World. It's up near 90 to 1. I checked earlier
today, it was 84 to 1, something like that. During COVID, it hit 120. I made a purchase,
a big purchase of silver when silver dropped big time at the very beginning. And I can't remember
the price that it went to, but I was able to load up using the ratio as my guide.
Yeah, I love it. So I thought we could go back and take a look at this ratio and see
why it has been in a certain range for so many years and why it might be different now.
Well, I found this wonderful article from the Cambridge University Press,
Golden Silver, Relative Values in the Ancient Past. And this was published about a year ago.
And they documented more than 200 relative values of golden silver across almost 3,000 years.
So this is incredible. I mean, they found sources from clay tablets and stone engravings
and papyrus and just anything they could get their hands on. And they compiled a whole
bunch of charts. And I have two of them I want to share with you today. The first one is this.
It sort of summarizes the gold to silver ratio, which is what we're seeing on the Y-axis,
across the whole time span that they looked at from 3,000 BC to about 400 AD.
And they have all these different sources, each represented by this shape here. And we've
got the Near East, Egypt, Greece, and Rome. And so you can see that this entire chart spans a
gold-silver ratio of 0 to 25. And the highest data point, which is certainly an outlier,
was about 21. Ordinarily the ratio, single digits for the first few thousand years,
and then moving up to about between 10 and 15 to 1.
So yeah, when you look at this, Mike, what do you see?
Well, you know, I'm sorry, Egypt is the only one that goes across the entire graph,
spans the entire time period. But I do see that in the ancient world, before
gold and silver became money, before they became fungible, when it was little scraps,
bits and bobs left over from refining and making artwork or religious objects or something like that.
They were trading these, they were being used as a medium of exchange, but they weren't fungible.
You had to weigh and every one of them, you know, if you're buying something with it,
you're doing a trade. You had to weigh the precious metals, and then the seller
had to take a guess as to the purity. So it made, trade was not, it was the invention of money that
made trade easy once it became fungible. Same purities, same weights. And you can see that
for some reason, when it comes to international trade happening, and gold and silver being
money. So it's being taken on ships, certain weights and purities, and it's getting distributed
all through these countries. They sort of, it goes up and it's all grouped together
at that point. Yeah, right. Exactly. So, yeah. Yeah, very cool. And something I notice here,
all these green circles, this is Greece, it's interesting how many of them are happening
at the same time. So you could draw a vertical line through them at so many different points.
And basically all those different ratios are happening at the same point in time. So, you know,
as low as nine to one, as high as 15 or 16 to one. So I find this very interesting.
It kind of suggests that there, that there is a band or a range that, that could seem reasonable.
You know, it's not necessarily that there's one true number, there's a range that's
reasonable. Do you see the three that overlap that are right at 10? I believe that
Alexander the Great, the average there you can see had been, well, there's clusters going on,
13, 14 to one. And he just thought that the exchange rates floating were silly and he
made a declaration that it's going to be 10 to one and it didn't last.
It couldn't. The free market always overwhelms any government dictate.
Yes. And that is going to be a recurring theme throughout this video.
There's all kinds of government dictates, but eventually the free market will overwhelm them.
And that's sort of the big opportunity here with Silver. So there's sort of one question
that emerges from this chart, which is why does, why does Egypt have so many
markings down here around three to one, two to one? Yeah. And then, then they kind of come up higher
when, you know, international, well, international trade happens. Well, trade, yes. And so there's
this in my book, it was my theory that, that whatever they were digging up that was circulating
locally, it's the ratio of how much gold there is in circulation compared to how much
silver there is. And that was in my first book. And at that point, it was only conjecture on my part.
I just said, well, this is logical. It's probably the reason. Yes. Well, I think this map here,
which comes from that same article I just showed, I think this absolutely corroborates
your hypothesis. Yes. Glad you found this. Yeah, it does. Wow. Gold and silver deposits.
And you can see around Egypt and, you know, the surrounding area, it's all gold deposits.
There's very few silver deposits. It's hard to find these little
silver plus marks compared to, you know, the rest of Europe and Africa and so forth.
Silver is fairly abundant. In my book, I had said that there was a point in ancient China
where silver was twice as valuable as gold. And if you look at northern China on here,
that cluster right there, there's only one silver mine in there. And it's all gold mines.
Well, there might be two silver mines. But in that or the cluster that's at the very top
going to the right on that map, that one, if there's so much gold being dug up and no silver.
Now, one of the things that this map doesn't show, it says gold deposits, silver deposits,
it doesn't tell you the size of the deposit. You might have a whole bunch of tiny gold
deposits and one giant silver deposit. And that upsets the ratio. But still, this would,
I can see that silver being twice as valuable as gold in some areas on the planet
before all the areas were connected together is entirely a, it's a high probability.
Yeah, it makes sense to me. And that's what the researchers of that article found.
This one I showed here is they basically said that the exchange rates are largely determined by
the availability of the metals. So pretty much driven by scarcity.
Okay. Yeah. So moving right along here, I wanted to fast forward up to the year 1687 and show
the gold silver ratio since then. And you could see that it was pretty level, well under 20, around,
I guess 16 or so until 1873. And that's often called the crime of 73, at least in the United States.
And then the ratio started to become extremely volatile. So as you mentioned the last 150
years, it's been out of whack, definitely. So yeah, I guess I can elaborate a bit on the crime of 1873.
Basically in the United States, this is when silver was demonetized. I know you take
issue with that word a little bit. Do you want to explain why you don't like that word demonetized?
Well, it wasn't completely, we still had very low value silver certificates. So the
paper currency was redeemable in silver dollars. And we did issue silver dollars. Again, there's a
Morgan series that's the early 1920s. I can't remember. And there's some of the,
I can't remember the one after Morgan silver dollars. But that I think was 1927 or something
like that where we issued a whole bunch more. And even when I was a kid, there were still silver
certificates. And so it wasn't completely demonetized. It was relegated to change basically.
It wasn't being, if you were a foreign government or something like that, the
treasury was not holding silver that they could back up their notes with. They backed it all
up with gold. And so we stopped using silver when it comes to large transactions and the government
making the dollars that somebody is holding redeemable. There's one other thing I'd like to
point out on this chart. I can't remember exactly what it was when it was, but you see
crime of 73, it starts to rise. But then it sort of goes vertical right there. Yeah.
And I believe that is where they discovered the silver valley in up near court delaying Idaho,
the largest silver discovery on the planet. And then just a few years later, the Comstock
load in Nevada that just barfed out this immense quantity of silver in just a couple
of years. And then the discovery was depleted at that point. And so we demonetized. The
government is liquidating the largest silver hoard on earth. And then we find all this,
so there's this ton of new supply that comes to the market right in that period.
Yeah, it makes sense. And what's interesting is you can't even see the effects of the California
gold rush, like 1849, because everything was fixed by law. So even if you do get a huge influx of one
metal or the other at that time, it shouldn't upset the ratio provided the government can
enforce it. So yeah, we do get big discoveries from time to time. But on balance in the
long run, the ratio of their prices should be in proportion to the ratio of their scarcities.
Maybe not exactly, but it should be. Yeah, they were still minting silver dollars. But
this is the price of the, or this is basically the price that the mining companies would be selling
to the Treasury, or if you're buying bars. But there was still basically a peg on a silver
certificate. So a $1 silver certificate was one 20th of a $20 bill, which was a $20 gold piece.
So it had a government peg just because of the denomination of the bills that backed it
and the silver dollars that you could trade for your $20 gold piece.
Yes. And by the way, the crime of 73 isn't the only thing that happened in 73. There were
two other instances, two other big events that happened around the world, one in the German
Empire and one in the Latin monetary union. So the international classical gold standard commenced
in 1873, almost by accident, by the way, it's largely largely considered to be an accident that
the world went on a gold standard as a result of several things happening. The German Empire
decided to transition from the silver North German Thaler, that's the root word of the dollar that we
have. The South German golden to the German gold mark reflecting the sentiment of the first international
monetary conference in 1867. Okay, blah, blah, blah. 1867. Isn't that about the end of the
Civil War? Yeah, two years later. Yeah. Okay. Yes. Okay. So anyways, the following countries switched
from silver or bimetallic currencies to gold in the following years. And German Empire, Latin
Monetary Union, Scandinavian Monetary Union, Netherlands, Ottoman Empire, Austria, Hungary,
Russian Empire. And I also highlighted the gold silver ratio in red boxes. And you can see
that it's about 15 in all these different places. 18 in Austria, Hungary and Russia 23, a bit of an
outlier there. But, but yeah, just in the 1870s, I mean, a pretty modest and consistent ratio of
about 15 or 16 to one. That outlier of Russia makes me wonder what happened in their currency
supply, because that creates an arbitrage opportunity. Somebody can export one bag of coins of one metal
and buy, swap it for a different metal. When you bring it back, you can buy two bags now. And so
you keep on repeating the process. And what happens when you're out of step with the rest
of the world, either your gold or your silver is going to leave. Yeah. So I didn't have time
to research whether or not that happened. But I'm sure some people took advantage of it. Yeah.
So anyways, very, very interesting how that played out. And I do want to zoom in a little bit on
some of the more recent things in case you want to comment on some of the developments that
have happened since then. 1939, the gold silver ratio peaked at 98 to one after Roosevelt set gold
at $35 an ounce. 1945, Bretton Woods. 1971, Nixon took us off the gold standard. 2020,
you mentioned earlier that the gold silver ratio peaked over 125 as a result of the COVID pandemic.
So anything you see here that you want to comment on, Mike? Well, something that's
missing is 1966, when Lyndon Johnson created what David Morgan refers to as the Johnson sandwich
when there was copper in the that when they took silver out of our coinage. And so
the Gresham's law was kicking in and silver coinage was disappearing from circulation.
And there wasn't enough, I mean, I've got quotes from Johnson saying, you know,
we got to have coins for parking meters. There was literally a shortage of pocket change.
So anyway, yeah. The one thing that I would add here beyond what you said is in 1975,
basically allowing gold and silver futures and paper, paper metal, basically. Yeah.
Also, that one little spike down that goes down below 14. That is January 1980,
when silver, you know, gold had been rising for months and months and months. And it was about
November of 1980, that's 1979, that silver finally really took off like a rocket and
started from about four bucks to 50 bucks. And so the gold silver ratio spiked. And I think
that day is coming again. And that will be an alarm to either start considering selling
your precious metals or converting your silver to gold and getting many, many times more gold
than you paid for. That's the reason, you know, it's been so out of whack that I haven't bought any
gold in a long time because I look at the ratio and I just can't allow myself to buy gold at
these prices. This out of whack ratio because eventually things return to the mean. And all the
paper gold and silver that's traded today is building up pressure. The free market has not
been able to resolve this issue because the paper is preventing it. So let's move on.
Yeah, absolutely. Speaking of paper, I took this screenshot from the US debt clock. Look at this,
the paper silver to physical silver ratio is 411 to one, paper gold to physical gold ratio
133 to one. So that means for every physical ounce of metal, there's 100 or 400 paper ounces
of the corresponding metal. And they all think they have title to that same ounce. So it's
musical chairs. And when the music stops, 310 people are going to be sol out of luck.
And one person actually can claim that real ounce the rest of the kind. And so the only way that
these types of things resolve is through crisis and an explosion in price. Yeah, exactly. So
probably three times as manipulated or potentially price suppressed as gold. But they both collectively
are trading as if they have 100 times greater supply than they really do. So the price is
going to have to adjust once people realize that paper metal is not the same as actual metal.
Right. Because of this ratio, it's not even a claim on the actual metal. It's a fraud.
It's what it is. Yeah. Yeah, I agree. So speaking of the opportunity at hand here,
there is a four year chart of gold and a four year chart of silver. And they both are forming a
four year parabolic base, which is kind of cool, kind of beautiful and kind of rare.
And kind of bullish. Very, very bullish. Kind of bullish. That's an understatement.
Extremely bullish. Yeah. Not only a gorgeous chart is also a very unusual setup with gold
and silver looking this similar. And if they are to hold the trend line, the way is up. Yeah.
Yeah. You know, all of this supports what I've been saying for years is that you will see silver
in the triple digits. It really needs to be there to get that supply back up. And then
for the past couple of years, several years, we've had a supply deficit.
And we're just, you know, with all of the battery technology and solar that's coming out right now,
the industrial demand for silver. And all you need is a crisis and people actually
wanting it when there's monetary demand, when gold and silver start acting like money once again,
then you're going to see some real fireworks, some fireworks in gold and sort of a
nuclear bomb in silver. I mean, it's going to be huge.
Yeah. Absolutely. And speaking of fireworks in gold, I wanted to include the comparison of today's
gold bull market compared to that of the 1970s. Just as a starting point, and then obviously
silver is amplified on top of this. So you presented this chart at the limitless recently.
Do you want to describe what you're seeing here? We originally did this chart, you and I, back in
2022. And basically, I asked you to do what they do. It's something called Elliott Wave for
anybody that doesn't know. When something is rising, it goes up in like three or five waves.
So it'll go up in wave one, wave two, wave three. And I had you take the lowest price that gold
traded at between 1980 and I believe we did this in October of 2022. And so it didn't have that
extension on it. It had the up wave and then that bull. It didn't have that area, that tail.
And then you updated it for limitless that I appeared at just, I don't know, four months ago
or something like that. And you explained in a video that, I was going, wow, what happened?
It diverged. And I'm going, oh, no. And then you were the one that said what happened
right during that period where it diverged. What was it? COVID lockdowns. And so and then
the creation of tons of currency. And I believe that this is this, this suppression that you just
talked about all those frames that we just covered that information. This is storing energy.
You can't print as much currency as we've printed without this reacting somehow. The
quantity of currency that was created for, you know, from 2008 until today, but especially
when COVID hit, that should have gone vertical and it didn't. And so if it's storing energy,
I think it's going to, you know, just so that people can get a grasp on this again.
The blue scales on the right side and the bottom is the 1970s bull market. And that's the blue line.
And then the orange scales, the gold colored scales on the top and on the right hand
scale. That is the present day. And what you had to do to get that, it's 1970, August 15,
71. And 1999 was the lowest price that gold hit between 1980 and today. And so we took those
two lows that were there, lined them up. And then you took the highs from 1970 and you squeezed
today over. And so if people look at the bottom time scale and the top time scale,
the bottom time scale is just two years at a time. And then we've got the top scale,
we've got four years per measurement. And the measurements are actually closer. So we had to
squeeze time. And then we found that we had to squeeze the amplitude by a factor of 1.6
to be able to fit this in there. And so the, if this goes up to match the,
you're talking about close to $10,000 an ounce on this, but I think it's going to blow past it
because of all this stored energy. So you're talking about some real fireworks.
Yeah, absolutely. So just to kind of bring it all home, if we're at a price today of about
2600, 2700, if it repeats what it did in the 1970s, even with some kind of a lag here,
we are talking about 9000 or $10,000 an ounce gold. So that's called a 4x in the price.
And looking at the gold-silver ratio, which we've been looking at throughout this whole video,
that probably should move by a factor of 4 or 5 relative to gold to come back into a line.
So yeah. So if gold is moving by a factor of 4 and silver moving by a factor of 4 times that,
we're talking 16x in the price of silver in order to bring all these ratios back into balance.
There's a tremendous opportunity here. Yes, there is. So I want to thank you for all of this data.
And for the audience, please like, subscribe, hit that notification bell.
That helps us spread the word. I want to thank everybody for watching and thank you, Allen.
Thanks, Mike.