This article was originally printed in Numismatic News.
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Silver’s is approaching the 38 to 1 ratio versus gold. While I have thought the old 16 to 1 ratio often touted by aggressive silver bulls as overdone, and was more inclined to accept the 40 to 1 ratio often suggested by analyst Richard Russell of Dow Theory fame, I now wonder if somewhere in the middle might be more appropriate.
Looking at the silver dollar market one would think that silver is certainly gaining on gold. To calculate this I used the live bid for an EF Morgan dollar at $34 and a $20 Liberty gold of the same grade at $1,460. Convert both to an exact ounce – $34/.7734 = $43.96 and $1,460/.9675 = $1509.04 – the ratio equals 34.3 to 1. This ratio was nearer 50 to 1 a year ago and there is even a greater disparity in that change if you calculate it with Mint State grades where in MS-63 it drops below 29 to 1.
Morgan and Peace dollar activity is extremely brisk with generic pricing far overshadowing better date material. In fact in the last two weeks I have only found price movement in three better-date issues while there have literally been hundreds of changes in the common issues. Remember the best value lies in those issues where the common date premium has overshot dates that previously had higher values. Given time the scarcity premiums will return.