Over 4,000 years ago during Sargon the Great’s reign of the Akkadian Empire, it took 8 units of silver to buy one unit of gold.
This was a time long before coins. It would be thousands of years before the Lydians in modern day Turkey would invent gold coins as a form of money.
Back in the Akkadian Empire, gold and silver were still used as a medium of exchange.
But the prices of goods and services were based on the weight of metal, and typically denominated in a unit called a ‘shekel’, about 8.33 grams.
For example, you could have bought 100 quarts of grain in ancient Mesopotamia for about 2 shekels of silver, a weight close to half an ounce in our modern units.
Both gold and silver were used in trade. And at the time the ‘exchange rate’ between the two metals was fixed at 8:1.
Throughout ancient times, the gold/silver ratio kept pretty close to that figure.
During the time of Hamurabbi in ancient Babylon, the ratio was roughly 6:1.
In ancient Egypt, it varied wildly, from 13:1 all the way to 2:1.
In Rome, around 12:1 (though Roman emperors routinely manipulated the ratio to suit their needs).
In the United States, the ratio between silver and gold was fixed at 15:1 in 1792. And throughout the 20th century it averaged about 50:1.
But given that gold is still traditionally seen as a safe haven, the ratio tends to rise dramatically in times of crisis, panic, and economic slowdown.
Just prior to World War II as Hitler rolled into Poland, the gold/silver ratio hit 98:1.
In January 1991 as the first Gulf War kicked off, the ratio once again reached 100:1, twice its normal level.