In long horse race, gold trounces silver

A commonly used statistic is that the U.S. dollar has lost over 98 percent of its value since 1913.

This is measured against gold.

In 1913, the dollar was backed by gold.

In 2018, it is not.

The precise depreciation today as of my checking the price of gold on the Kitco website is 98.44353 percent.

Rounding to 98 percent is merciful.

As often as you might have seen this figure bandied about, have you ever wondered about a similar comparison for silver?

How much has the dollar depreciated against silver since 1913?

In 1913, the average price of silver was 61.241 cents per troy ounce.

Today, silver is $ 16.41.

I use the average price because, in 1913, the price of silver fluctuated day to day, much as does now.

On the other hand, gold was fixed in place by the government in 1913 at $ 20.67 an ounce.

The depreciation of the dollar in terms of silver is 96.26807 percent.

These numbers make it seem that the depreciation is remarkably similar.

However, even seemingly small differences add up.

The dollar now is worth 1.55647 cents from 1913 in terms gold.

In terms of silver, it is worth 3.73193 1913 cents.

Again, at first glance, it seems that both numbers are tiny.

So what?

Well, the difference is actually huge.

The relation of silver to gold in 1913 has changed dramatically.

In 1913, it took 33.751898 ounces of silver to equal the value of one ounce of gold.

Today, it takes 80.926264 ounces of silver to buy an ounce of gold.

Gold has more than doubled in value relative to silver in the last 105 years.

To be precise, the price of gold has risen by a factor of 2.3976803 compared to the price of silver.

In percentage terms, gold has gained 239.76803 percent in terms of silver.

Can we be merciful here as well and round to 240 percent?

Gold’s value is 240 percent more today in terms of silver than it was in 1913.

Some people interpret this as saying silver is undervalued now.

Others say that gold has proven to be a sounder investment over the long term.

What do you make of this?

Buzz blogger Dave Harper won the Numismatic Literary Guild Award for Best Blog for the third time in 2017 . He is editor of the weekly newspaper “Numismatic News.”

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