ByBrandon Kochkodin,
Forbes Staff.
By one measure, silver has caught up to gold. And then some.
The gold-to-silver ratio (the price of an ounce of gold divided by the price of an ounce of silver) has dropped below 50 for the first time since March 2012. In simple terms, that means silver is trading at its highest level relative to gold in nearly 14 years amidst a rally that has seen gold rise by more than 80% over the last year to $5,100 an ounce while silver has surged 250% to $110 an ounce, both all-time high prices.
Chalk the moves up to uneasy investors. Wars in Europe and the Middle East continue. Trade tensions between the U.S. and China are ramping up again. Confidence in the dollar is weakening as U.S. debt grows and inflation stays stubbornly above 2%. Meanwhile, political leaders are warning that the postwar global system is fraying. At the World Economic Forum in Davos last week, Canadian Prime Minister Mark Carney said the “rules-based international order” is breaking down. That system refers to decades of trade, security and financial cooperation built after World War II. When that order looks unstable, investors tend to look for assets they believe will hold value outside governments and currencies.
