Gold and silver have always shown a strong positive correlation throughout history. Both metals were used as money for thousands of years, and they were often convertible into each other. In ancient Egypt, the gold-to-silver ratio was around 2.5; in ancient Greece, it was approximately 10. In Rome, it rose to around 12–13. After the discovery of large silver deposits in the Americas, the ratio gradually increased to about 40 in 18^th – 19^th century. Although the gold-to-silver ratio has risen steadily over time, the slope of this increase has been very low. Due to this low slope and historically high correlation, the ratio occasionally creates highly profitable pair trading opportunities, often with lower risk than holding outright long or short positions in gold or silver. 

(Gold / Silver Ratio) 

Another important dynamic of the gold/silver ratio is that gold is generally perceived as more of a safe-haven asset, while silver has more industrial applications in the modern economic system. During times when confidence in fiat currencies declines or during major economic or geopolitical disruptions, demand for gold typically increases. Silver, on the other hand, is a critical component in the technology and manufacturing sectors, and tends to benefit more during economic expansions. 

In the chart above, you can see that during key historical events such as the collapse of the Soviet Union and the 2008 financial crisis, the gold/silver ratio experienced sharp upward spikes and formed tops. When applying the regression tool to the chart, the ratio has exceeded +2 standard deviations above the regression line only twice: once during the early 1990s, a period marked by the Soviet Union’s collapse, the Gulf War, and a U.S. recession and again briefly during the COVID-19 shock. Aside from those instances, the ratio is currently the closest it has been to the +2 standard deviation line since 1980, recently surpassing 100. 

The current wave of U.S. tariffs and isolationist policies represents a potential game changer for global economic and geopolitical dynamics. It might effect the fundamentals of the world that has been setup after the second world war. The gold/silver ratio appears to be pricing in this shift, but it remains uncertain whether it will continue to rise or if a top has already been set. Either way, this environment is likely to create a significant pair trade opportunity: selling gold and buying silver, with proper risk management. Eventually, the ratio is expected to decline toward the 80 level. For reference, if silver were to stay at its current price, gold would need to drop by approximately $672 to reach that ratio. However, the more probable scenario is that silver rises while gold retreats, closing the gap. Of course, how far the ratio might climb before reversing remains uncertain. 

(XAGUSD) 

In the short term, silver’s recent upward movement has been much more subdued compared to gold. The current trend appears slightly negative, with the price approaching the upper trendline. The 33.05 level, formerly a resistance zone now acts as short-term support. If this support holds, silver may attempt a move toward 34.50 in the coming days and test the upper boundary. The real directional decision is likely to be made following that test.