100:1 – The Silver Stretch

April 2025 is a moment of historical significance for precious metals investors the gold-silver ratio has reached 100:1. This level was last breached in June 2020 and has been surpassed only a handful of times in the past century - notably during the Great Depression, the early 90s recession, and the market collapse during Covid. This rare occurrence signals a strategic opportunity in silver as well as a statistical anomaly, historically undervalued at such extremes and poised for significant appreciation.

The ratio’s ascent reflects sharply divergent dynamics between gold and silver. Gold, trading at an all-time high upwards of US$3,350 oz, has cemented its role as the ultimate safe-haven asset, driven by sustained central bank acquisitions and repatriation, geopolitical instability, and aggressive tariff policies under Trump.  Silver, by contrast, has spot prices dipping to US$28.74 - a seven-month low. Silver is unique in its dual nature as both a monetary and industrial metal, with around 50% of demand tied to sectors like defence, technology and solar energy, all sensitive to tariff-induced economic slowdowns. Consequently, silver is trading at less than 1/100th of gold’s value, a disparity that market analysts, including Bullion Vault’s Adrian Ash, describe as pricing in a “global economic recession.”

Historical precedent underscores the rarity and implications of a 100:1 ratio. Over the past 125 years, such levels have been transient, typically resolving with silver outperforming gold as economic conditions stabilise. In May 2020 when the ratio was last at 100, silver surged 37% over the next six months, outpacing gold’s 10% gain. Comparable patterns followed high ratios in the 1990s and post-Depression periods, where silver’s higher beta and industrial leverage amplified returns. The current ratio, touching 106.05 at the time of writing, aligns with these cycles and positions silver in what practised investors recognise as a critical accumulation zone.

Several macroeconomic tailwinds reinforce silver's case. Persistent inflation, now intensified by tariff-driven price pressures, is eroding real returns on traditional assets. Fed Chair Jerome Powell has acknowledged that Trump’s expanded tariff regime risks higher inflation and slower growth, further enhancing the appeal of precious metals as a hedge. Global equity markets, uneasy with trade war fears, face the prospect of prolonged underperformance which is prompting capital flows into physical assets. Silver, with its lower entry point relative to gold, offers an accessible alternative for investment diversification. Lastly, silver’s fundamentals are in good shape. The Silver Institute reported a fifth consecutive annual supply deficit in March 2025, with industrial demand outpacing mine production and waning exchange inventories.

Market sentiment is reinforcing silver’s potential. Ratios above 80 historically signal undervaluation, with 100 marking an extreme inflection point. However, risks merit consideration. Silver’s industrial exposure leaves it vulnerable to a deeper economic contraction, and persistent strength in the US dollar, projected to rebound above 100 points, could temper near-term gains. Allegations of price manipulation in futures markets also warrant vigilance, though they have yet to derail silver’s long-term cycles.

For sophisticated investors, the gold-silver ratio at 100:1 is a call to reassess silver’s role in a diversified portfolio. Its current pricing reflects an oversold condition against gold, underpinned by tightening supply and strong demand. Historically this data has suggested that such extremes precede sharp reversions, with silver delivering asymmetric returns. While patience is needed amid short-term uncertainties, the strategic case for silver is compelling - a rare alignment of value, fundamentals, and market dynamics positions it as an opportunity in an era of economic flux.