Gold and silver prices are something that is always closely watched globally.
Now, the same discussion is here in view of the Covid-19 crisis.
To everyone’s surprise, the gold-to-silver price ratio is currently at 116, the highest ever in history dating back to ancient times.
DataTrek Research co-founder Nicholas Colas has logic in stating this!
After remaining around 15-20 for hundreds of years, the gold-to-silver price ratio went past 40 many times after the US came up with gold standard in the 1970s.
Colas says this range of fluctuations has mostly happened at times of recession, economic or geopolitical instability.
Colas explains that the dynamic price difference is due to demand for these metals, individually. While the industry accounts for the majority of silver demand, investors and traders account for gold demand.
With the industry performance declining due to the Covid-19 crisis, the demand for silver eventually came down. In contrast, the gold demand increased as investors looked at it as a means of safety trade.
Thus, Colas feels that it makes a perfect sense of the huge difference in the gold-to-silver prices.
“Silver prices won’t recover until the global economy and industrial production do, so the gold/silver ratio at all-time highs makes sense,” Colas adds.
Gold Demand in India
Amid the gradually-rising Covid-19 cases, the gold futures in India stand at Rs.46,505 per tola, and it is Rs. 41,875 per kg for silver.
Gold Price in India for Last 10 Days
Source: Goodreturns.in
Silver Price in India for Last 10 Days
Source: Goodreturns.in
“The rising dollar is putting pressure on gold prices, but ahead of weekly initial jobless claims the sentiment still favors bulls. The investment demand too has continued to rise,” says Jigar Trivedi, a Fundamental Research Analyst.
He adds the state of absence in the domestic currency market makes gold followed the global trend.
