Simply put, The Silver Gold ratio refers to the number of ounces of silver that it takes to buy 1 ounce of gold.
To determine today’s ratio, you would simply take the spot value of gold and divided by the spot value of silver.
If you were investing based on this ratio, at today’s ratio of approximately 68 to 1, Silver would be very under priced relative to gold compared to the average ratio in the 20th century of 47 to 1.
According to United States History, in 1837 Congress established relationship between silver and gold at the ratio of 16 to 1 meaning that 16 ounce of silver would be equal in value to 1 ounce of gold. During the 1860s, little silver was mined and the open market price rose sharply. Miners stopped selling their silver to the government and instead found other buyers including jewelers and other users of the metal. In 1873, reacting to market realities, the Grant administration demonetize silver, leaving gold as the only standard. see our post What is the gold Standard?
The U.S. Geological Survey estimates that there’s 17.5 times more silver in the Earth’s crust than gold, which could provide another explanation for the pre-1900 Silver to Gold ratio average.
In modern time however, the Silver to Gold ratio has averaged about 47 to 1 and has fluctuated wildly at times