The price ratio of gold and silver has hit a century-old high. Will the market panic under the epidemic continue?
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Centennial Gold to Silver Price Ratio
The gold-silver price ratio, which represents the crisis economy, reached the highest point (ATH) above 120 on March 18 this year, a 100-year historical record, which has attracted widespread attention from economists and investors around the world. According to data from the macroeconomic website, since 1915, this indicator has only approached or reached 100 points in the middle of World War II in 1940-41, the Gulf War in 1990-1991, and the eve of the disintegration of the former Soviet Union. The severity and the resulting market panic are enormous.
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Ref：https://www.macrotrends.net/
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Two ratios of preservation value and functional value: Bitcoin/Ethereum VS Gold/Silver
In a special historical period and economic environment, the indicator reflecting the dispute between wealth preservation value and practical function value is not only the gold-silver price ratio (blue line in the figure below), but for the younger generation, the Bitcoin-Ethereum price ratio (below The orange line in the figure) reflects the same value logic: the market has insufficient confidence in practical production construction (network or entity), because objectively, economic activities have slowed down, liquidity has tightened significantly, and demand for products and services has been relatively weak, so as a function The value of silver and Ethereum, which are commercial investment products, have been suppressed to varying degrees; on the contrary, market panic and the risk of long-term inflation have made investors actively seek safe-haven assets to prevent wealth from shrinking, while traditional wealth symbols Gold and Bitcoin, which occupy the number one concept of digital wealth in the Internet age, have both climbed steadily after the panic selling in March, and gold is approaching its all-time high.
The figure below directly compares the change curves of two important price ratios since reliable ETH price historical data is available. It can be seen that after the price of Bitcoin skyrocketed and fell back at the end of 2017, the two ratios have seen a steady increase in trend, which has continued to this day. This means that no matter for traditional investors or millennials, the preference for wealth investment is "turning off the real and turning to the fictitious" trend, and wealth preservation based on value consensus is particularly important. Even so, we need to point out that the "off-the-ground" here does not absolutely mean that the actual production function has declined significantly, but may just mean that in the special historical stage of human technological development, it is relatively easy to meet material needs, so the value of wealth it brings It also continues to decline in value relative to spiritual needs.
