The ghost of the spread is once again hovering over the markets. This time it's not about the one between the BTP and the Bund, but about a more significant difference for the global economy: the one between the prices of gold and silver. The fear of one trade war between the US and China it has increased the gap between the two values, triggering a trend that in the past has often preceded an economic phase of difficulty.
But let's move on to the numbers. Since the beginning of 2018, the price of gold has increased by around 3%, while that of silver has declined by around 3,5%. In this way the spread of the gold-silver ratio has risen to above 80, the highest value of the last two years, higher by almost a third (27%) than the average of the last decade.
The link with the China-US trade war is easily explained. 55% of the silver in circulation in the world is used for industrial purposes (electronics, photovoltaics and more), therefore the demand is directly linked to the economic cycle. On the contrary, gold is the safe haven asset par excellence, the one on which purchasers concentrate in phases of instability or uncertainty (when not open crisis).
To be clear, the last surge in the gold-silver spread above 80 dates back to the beginning of 2008, when there were fears of a sharp slowdown in the Chinese economy. Not only that: it also happened in 2008, in the midst of the financial crisis.
