January 2026 - Week 2 Edition
The Much-Watched Gold/Silver Ratio Has Been Cut in Half
Back in March 2020, in the height of the COVID-19 scare, gold was soaring past $1,500 per ounce but silver didn’t follow suit, trading under $12 at one point. That’s when the gold/silver price ratio reached an all-time peak of 125-to-1. Even in May 2025, silver traded in a narrow $31 to $33 range, as gold traded in the $3,200 range, for a 100-to-1 ratio. The gold-to-silver ratio as of last Friday was under 59, a level not seen in 13 years, since January 2013. That means the ratio is down more than 40% (100 to 59) in just the last eight months.
In recent Metals Reports, we have summarized the reasons for silver’s meteoric rise, including increased industrial demands (notably for AI data centers), investor demand, limited newly mined supplies and now the new wild card of China putting severe limits on the amount of silver they will clear for exports this year and next. There may also be speculative market trading affecting the price of silver.
Historically speaking, the gold/silver ratio reached its modern low of 31-to-1 in April 2011, when silver hit $50 before gold caught up in August of that year. Oddly enough, that 31-to-1 ratio matched the precise ratio in the 1896 Gold Bug election. That is when the war between gold and silver interests was the main political issue of the decade, something like inflation is today. Over the long term, I prefer gold and rare coins over silver for ease of storage, transportation and overall performance but silver has done some catching up in the past year.
The Wizard of Oz (Ounces) Dramatizes the Rise of Silver vs. Gold
As bizarre as this sounds to modern ears, the gold-versus-silver (or bimetallic) monetary standard was the main voting issue in the 1896 and 1900 elections. After William McKinley won the presidency in 1896, L. Frank Baum drafted a parable of gold vs. silver in his popular fantasy, “The Wizard of Oz,” published in May 1900. It was an election year between the same two candidates who fought over silver and gold in 1896, when Democratic candidate William Jennings Bryan (favoring the Western silver interests) famously said at the nominating convention, “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind on a cross of gold.”
Bryan’s rhetoric didn’t work in 1896 and neither did the pro-silver “Wizard of Oz” parable in 1900, as the Republican Gold Bugs prevailed in 1896 and won by a slightly larger margin in 1900:
Back in 1900, readers of the “Wizard” story were well aware of the allegories in that book. In its original imagery, not necessarily matched by the Technicolor film in 1939, the Gold Standard was represented by the Yellow Brick Road, as it was paved with gold bars leading to the capital, known as Emerald representing green paper money.
In the book, the Western silver interests were led by young Dorothy, a farmer’s daughter from Kansas, who wore silver (not red) slippers in the original book, to designate silver coinage. She met up with three allies: the Scarecrow, representing farmers; the Tin Man, standing in for the industrial workers whose wages were falling; and the Cowardly Lion, representing the populist candidate of the merged Democrat-Populist party, William Jennings Bryan. He ran and lost two times to the Gold Bug Eastern Republicans, led by McKinley but secretly sponsored by the Wizard, the kingmaker of the Party, Senator Mark Hanna of Ohio.
Before Dorothy and her team could enter the Emerald (Greenback) City, they were ordered to wear green-colored spectacles. Then the Wizard said they must destroy the Wicked Witch of the West, acting against their own silver interests. They did so but then the little dog Toto uncovered the Wizard as a fraud. To return to Kansas, the good witch said, Dorothy only needed to click her silver heels together. Yes, Dorothy’s original shoes in the book were silver but Hollywood producers didn’t believe they would show up well on the screen, so they were changed to the iconic ruby red slippers.
As gold and silver now return to prominence in the private investment world – without an official gold standard – we are now re-entering a time capsule back to when Americans cared about monetary matters.
Silver is up over 12% and gold is up nearly 4% in the first nine days of the new year. Silver’s superior gains are predominantly due to the new embargo on most silver exports from China, the leading silver refining nation. At the end of 2025, silver dipped below $70. As we said then, this brief price dip at the end of 2025 was a new buying opportunity, as we also counseled in late October when gold staged a similar price correction of very brief duration. As always, we still advise people to “buy on dips” if any further correction occurs.
Metals Market Report Archive >
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