GOLD-SILVER ratio at 85 the highest since 2007

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Gold-Silver ratio climbed at the highest point since 1990 (see graph below).
Each time it reached such level, between 80 and 95, the ratio reversed its course due to an economic downturn event.

 

                                 Gold Silver Ratio

                                 From Teletrader

The peaks in 1990, in 2000, and in 2007 corresponded to an economic peak reversal.
Some analysts may argue that the peak could extend its rise from the current level of 82 to higher levels. Sure, but history shows that it has already signalled an historical warning.
Since the Great Crisis of 2008 the ratio fell from 90 to the level of 30, in 2011, corresponding to the end of the Greek crisis.

What does it mean ?

Both gold and silver usually climb strongly in an adverse economic scenario and in periods of trouble. But silver climbs quicker and stronger than gold due to its higher leverage and its higher volatility compared to gold. During these periods of troubles silver reduces its gap with gold.
These great moves are the consequence of irrational behaviour and the run to safe monetary assets.


This article was written for information only. It does not suggest that you should buy/sell the assets mentioned. Before implementing any trade you should consider your risk profile and ask for advice.


Written on October 8th, 2018.

Jean-Pierre Riepe – Swiss ProfilInvest


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