Watch the Gold/Silver Ratio

Just a quick reminder that in times of market stress, gold and silver will sometimes diverge, with gold catching a safe haven bid and silver selling off as a cyclical industrial commodity. During such times, silver can get very cheap relative to gold, an imbalance that’s usually rectified by silver outperforming for a while.

This looks like one of those times, with the gold/silver ratio (the number of silver ounces it takes to buy an ounce of gold) spiking to 100. Historically, a reading of 90 is a strong silver buy signal. And 100 is rare enough to be noteworthy.

The only other 100+ reading in this century happened early in the COVID pandemic when the “experts” were declaring a zombie apocalypse. That extreme only lasted for a few months as silver bounced from $14/oz in March of 2020 to $28/oz in August, paring the gold/silver ratio back to 70.

Now, we seem to be staring down the barrel of a “tariff apocalypse” that will probably blow over as quickly as the initial hair-on-fire stage of the pandemic.

The Lesson?

Don’t panic. If a trade war causes an equities bear market (or some other kind of crisis) that impacts precious metals, remember that silver is starting from a place of extreme undervaluation to gold and that every single time it’s been in that zone, it has outperformed gold until balance was restored.

So just keep on stacking. Buy the same dollar amount of silver each month, and try to ignore the screaming reporters while focusing on news like this:

Taiwan Offers Zero Tariffs and More Investment in U.S.

Global Leaders Rush to Woo Trump, Hoping to Sway Him on Tariffs

Von der Leyen offers Trump 'zero-for-zero' tariffs deal on all industrial goods