Centuries ago when the gold and silver standards existed the Gold to Silver ratio was
fixed at 15. Decades ago the ratio was 55. The US dropped the gold standard in 1971
( Thanks Richard Nixon ?) In floating since then, the ratio in modern times has been 75/
It can be said that below 75 gold is undervalued in comparison with silver while
over 75 it is overvalued in comparison.
At present since April 15th ( IRS demand tax returns and payments) the ratio has
consistently risen.
Trading Ideas from this:
Traditionally, an investor would now sell gold and buy silver at a ratio of 75 to 1
meaning sell quantity of gold for instance 5 ounces and then buy 375 ounces of silver
with the proceeds.
Using the XAUUSD and ZAGUSD, a swing trader would short sell spot gold
and go long on spot silver.
An options trader would buy a put contracts in a gold junior miner stock and
then hedge with call contracts of equal value in a silver junior miner stock
The above, are basic examples of how to use the gold to silver ratio as a basis
in trading decisions. The link below is a more detailed explanation of this.
fixed at 15. Decades ago the ratio was 55. The US dropped the gold standard in 1971
( Thanks Richard Nixon ?) In floating since then, the ratio in modern times has been 75/
It can be said that below 75 gold is undervalued in comparison with silver while
over 75 it is overvalued in comparison.
At present since April 15th ( IRS demand tax returns and payments) the ratio has
consistently risen.
Trading Ideas from this:
Traditionally, an investor would now sell gold and buy silver at a ratio of 75 to 1
meaning sell quantity of gold for instance 5 ounces and then buy 375 ounces of silver
with the proceeds.
Using the XAUUSD and ZAGUSD, a swing trader would short sell spot gold
and go long on spot silver.
An options trader would buy a put contracts in a gold junior miner stock and
then hedge with call contracts of equal value in a silver junior miner stock
The above, are basic examples of how to use the gold to silver ratio as a basis
in trading decisions. The link below is a more detailed explanation of this.