A signal has just appeared in the global financial markets which has only been witnessed one other time in recorded history – and it foretells of immense trouble for the world economy ahead.

What is the signal?

The gold to silver ratio – it has just shattered its former all-time highs.

Specifically, the ratio surged up to 125 ounces of silver required to purchase one ounce of gold during the midst of the Coronavirus panic in March. It has since come back to near 100 as this article is going to press, but the ratio remains above the previous all-time high resistance zone shown in black. Below we show a quarterly close of the gold to silver ratio dating back to 1940:

When is the only other time in history that the gold to silver ratio has broken out to a new all-time high?

At the start of the Great Depression, in 1930.

Party Like It’s 1929

Let us rewind back one century in our history books.

The 1920’s, so-called the Roaring 20’s, were a time of great technological innovation around the world. The widespread adoption of electricity in urban areas, commercial radio broadcasting, and the liquid fueled rocket are just some of the advances that occurred during the 1920’s and which have had lasting impacts on our lives.

Of course, throughout the decade, the US stock market rose to reflect these advances in productivity.

Yet by the end of the 1920’s, the stock market, which had previously been a gauge of increasing industrial productivity, morphed into a speculative mania. Stocks were bought with little regard to the fundamental health of the underlying companies, and traders sought quick profits in a market which seemingly could not fall. Buying beget more buying, and greed ruled the psychology of market participants by late 1929:

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• Gold emerges from a bullish flag pattern to retest old highs.
• Silver finally wakes up after a recent head fake, and this time it looks real.
• If the gold/silver ratio mean reverts in this market environment, silver investors are going to have really, really big smiles on their faces.

Gold and silver have both been surging recently perhaps for different reasons. Gold safe haven demand has been up since the COVID inspired lockdowns increased deflationary pressures on world economies.

Silver tends to follow gold as a risk hedge, but had been lagging behind gold’s run from $1190 dating back to late 2018’s market correction. It appears silver investors finally woke up and decided to participate in the market now that gold appears to have solidly reached a new plateau.

Gold Technical Analysis

Source: Trading View

Gold’s price breakout from $1580 in April is the more obvious of the two monetary metals, exhibiting a bullish flag pattern dating back to the beginning of April.

The low in gold’s price coincided with the introduction in the States of the coronavirus lock downs in March. This began the flag pattern that lasted until mid May, when gold finally got up and started to run. Gold recently retraced back to just over $1720 and has appeared to find a new base at that level. Gold continues up over $15 on the day, at time of this writing on May 19th.

I expect gold will retry precious highs around $1760 until it finds continued support, with the next point of resistance being $1785 which it tested twice in 2012. From there, it is onto $1900 an ounce if the gold bull continues to run on current economic uncertainty.

Silver Technical Analysis

Precious metals investors know well that silver bull markets typically follow gold ones. What is puzzling is that the latest leg of the gold bull market started in late 2018, and silver chose to break formation and test lows in the $14 range while gold soared.

Source: Trading View

Well, finally, silver investors are starting to feel the love again with the latest jump back into...