Based on an old reliable oil/silver ratio the price of silver should be more than twice as high as it is today, a bit more than $50 per ounce. During times of a more ‘physical economy' versus the ‘paper economy' we have now, oil and silver had a strong bond.

What many people don't know is that the oil price barely moved in the '60s. The most volatility to hit the oil market was when the price of oil dropped from $1.90 to $1.80. In the same decade there was an average correlation of 1.3 to 1 for oil and silver and in 1967 silver was more expensive than oil for a second.

In the '70s the oil price went from $2.24 to $11.58 because of the oil embargo. This had a strong impact on the price of silver, which rose from $1.39 to $4.39 over the same period. This put the oil to silver ratio on a whole other level of 3.0 to 1. Only by the end of the '70s the ratio dropped back to 1.5 to 1.

The paper era changed everything however. Money in paper investments never completely made it into the physical markets and the oil to silver ratio rose to a peak of 6.5 to 1 in 2008. The panic in 2011 brought it back to 3.2 for a little while, but the ratio is already back up to 5.3 to 1.

If we would ever go back to a ‘physical economy' and traditional correlations would return, the silver price should hover around $50 per ounce when you take into account the current price of oil (which is already depressed).