Gold-Silver Ratio Hits 30-Month High Ahead of Trump's 'Liberation' Trade Tariffs
Tuesday, 4/01/2025 15:25
The PRICE of GOLD again set fresh record highs Tuesday, peaking close to $3150 per Troy ounce for Dollar investors while industrially-useful silver slipped back below $34 with one trading session to go until President Trump's 'Liberation Day' for US import tariffs, now set to spur a global trade war.
That pushed up
the Gold/Silver Ratio – a simple measure of the 2 formerly monetary metals' relative prices – above 92.3, the highest since September 2022 and higher than all but 1.4% of all trading days since April 1968.
"The gold:silver ratio continues to widen as the economic problems that are helping to boost gold are working against silver," says analyst Rhona O'Connell at brokerage StoneX.
While
industrial and technological applications make almost 60% of silver demand against gold's below 10% figure, the grey metal enjoys no sovereign government or official sector buying. Whereas "Central bank demand has been supporting demand for gold over the last 24 months," says consultancy SFA Oxford in a weekly report for German bullion refiners Heraeus.
Survey data for March today said that manufacturing activity expanded in No.1 export nation China last month, but it shrank again in Japan, the Eurozone, the UK and the USA.
Output among European factories "surpassed the threshold for growth," says German bank Hamburg Commercial's chief economist, Cyrus de la Rubia. But "a significant part of this movement may have to do with the frontloading of orders from the US ahead of the tariffs, which means some backlash is to be expected in the coming months."
Prices paid by US manufacturers meantime leapt on the ISM PMI survey, rising at the fastest pace since the post-Covid inflation surge of 2022.
The European Commission
has launched a consultation on potential retaliatory measures against US President Trump's trade tariffs on aluminium and steel, notes precious metals trade body the LBMA.
"Silver is among the goods under consideration...[but its] critical role in electronics, renewable energy, investment products, and jewellery makes it a vital commodity for EU industries.
"Disrupting this flow with retaliatory tariffs could further stress supply chains, drive up costs for EU manufacturers, and increase global market volatility.
"Platinum and palladium group metals have also been listed and would be similarly affected."
Looking ahead to
Trump's Liberation Day trade tariffs, "expect a knee-jerk reaction to whatever is announced on Wednesday," says O'Connell at StoneX.
"For the longer-term, gold still has strong tailwinds, but whether there is much more upside is questionable. Silver’s long-term fundamentals remain constructive but the US President’s aversion to green energy is a stumbling block of a sort."
Back in precious metals investment, "Silver ETF holdings have increased by just 0.32% since the start of the year," SFA's note for Heraeus goes on, "compared to a 5.9% increase in total ETF gold holdings over the same period."
The giant SLV iShares silver trust fund was unchanged in size Monday, having expanded 2.3% across March to make the first monthly gain in five.
Gold's giant GLD product, in contrast, grew another 0.1% yesterday to reach its largest size since June 2023 with a 3.2% expansion across March.
World No.2 gold ETF the IAU also made a 2nd consecutive monthly rise in March, growing to its largest size since September 2023 by expanding 3.3%.
"While institutional investors have continued to buy into the gold rally...global gold ETF holdings are [still] some way off the previous high in November 2020 when the gold price was sub-$1900/oz," SFA's report for Heraeus goes on, also noting that the People's Bank of China reported only a very small addition to its bullion reserves for February.
"A reduction [in central-bank demand] could see some of that [price] support removed."
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