The relationship between gold and silver can be thought of as a “metallic credit spread” (hat tip to Bob Hoye) not unlike for example, investment grade bonds vs. junk bonds. Not to equate silver with ‘junk’ status, but due to its more cyclical, inflation sensitive and speculative nature than gold it will tend to rise in relation to gold in an environment of market liquidity and speculation.
When gold rises in relation to silver, the indication is often the opposite (risk ‘OFF’, liquidity problems), especially when the senior currency starts rising chronically at the same time. I call these the 2 Horsemen of the (market) Apocalypse.
The message of the gold silver ratio can be applied to many markets outside of the precious metals in correctly gauging the macro environment for investment or risk management. But narrowing the implication is dependent upon other factors at any given juncture (for example and as an exception, a USD-centric ‘Goldilocks economy’ can function fine with a rising GSR and USD.