Gold/Silver RATIO: some thoughts

OANDA:XAUXAG   Gold/Silver
Hi Guys,

"The most common method of trading the ratio is that of hedging a long position in one metal with a short position in the other. For example, if the ratio is at historically high levels and investors anticipate a decline in the ratio that would reflect a decline in the price of gold relative to the price of silver , investors should simultaneously buy silver while selling short an equivalent amount of gold , looking to realize a net profit from a relatively better price performance of silver compared to that of gold ."
(source: Investopedia

Below Gold/silver ratio marking 29th Sept 2008 as the most recent peak at 88% same as today. I've added the same date both in #gold and #silver to show that 29th of Sept 2008 is the dip before skyrocketing. IMHO today's cause for such high ratio is not the same as in 2008. IMHO 2007-2008 Financial Crisis created a distortion that need to be taken into consideration.
Since 2011 Gold lost 45% whilst Silver 70%. More ounces of Silver are required to buy Gold but why? Today Gold is up 94% and Silver 73% from last time their ratio hit such an high level.


Hope the above clarifies but please do not hesitate to contact me for any queries, comments or feedbacks.
Thank you for your support and for sharing your ideas.
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Please note that I am not a professional trader and these are my personal ideas only. The information contained in this presentation is solely for educational purposes and does not constitute investment advice. The risk of trading in securities markets can be substantial. You should carefully consider if engaging in such activity is suitable to your own financial situation. Cozzamara is not responsible for any liabilities arising from the result of your market involvement or individual trade activities.

Jun 05
Kommentar: Gold is a hedge against the notion that the Fed has things under control.
Silver occurs naturally at about 19:1 so that's about where it should be valued. They can't raise interest rates, or they'll cause an equity sell off. They can't lower interest rates or they'll cause a spike in gold, with just the rumor of such a thing. If gold rises without silver rising, then the Gold:Silver ratio goes higher. At some point JP Morgan is going to have to let silver run, because the cost of covering COMEX silver shorts will just be too overwhelming. There are approx 700 paper promise contracts for every ounce of silver held in this nutty fractional reserve crap. If gold rises, and silver starts looking really tasty, we may be in for quite a global financial meltdown. When consumer, and industrial demand start looking for delivery of their paper promises, that silver will be nowhere to be found. Every bank on the planet will fail. That's likely this summer as the Deutsche Bank derivative conundrum comes home to roost. Who knew silver would become the buy of the century ? Silver IS the golden bullet at this point in the program.
+1 Antworten
Pretty nice TA. Thanks for sharing. It's time to long Silver on monthly TF.
+1 Antworten
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