IvanLabrie
Short

Gold/Silver ratio: Long term bearish decline

OANDA:XAUXAG   Gold/Silver
a month ago
The Gold/Silver ratio             shows an interesting setup here, and correlation to inverted SPX             , which points to the nature of the ratio's movement tied to risk off/on phases. This has to do with the real world applications silver             has as an industrial metal, compared to gold's function as a store of value and risk off protection.
I think we can see a long term decline, implying the price of silver             will either appreciate or depreciate less than the price of gold             , in comparison to it at least.

It's probably a good trade to take as a pair, which if you're using futures , implies you use a 2 to 3 ratio, selling 2 GC             contracts and buying 3 SI contracts to enter the trade with reduced margin requirements. (I think there's a new contract for the ratio alone, but not familiar with it). You should size the trade based on risking 1% to 2% max if the price were to go against you coming back to 70.43.
In the case of CFD             or FX traders, you could open trades in the XAUUSD             and XAGUSD             instruments, or using this XAUXAG or XAGXAU contracts if they exist in your platform. If you own physical gold             , exchanging it for silver             makes sense at this point (if you didn't already).

Good luck,

Ivan Labrie.
a month ago
Comment: On track, quite a scare but it's going well now.
24 days ago
Comment: Change of direction in the ratio implies risk on sentiment is waning, we could see a rally in gold next.
If you're interested in joining my trading newsletter or private lessons, message me. I trade Forex, Equities and Commodities. Contact: skype @ ivanlabrie, PM here or QQ (2954487803).
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