Relationship between Gold and Silver
Gold and Silver has been mostly co-related historically and are inversely proportional to US Dollar. The Importance of the Gold-Silver Ratio for Investors
The practice of trading the gold-silver ratio is common among investors in gold and silver. 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.
The practice of trading the gold-silver ratio is common among investors in gold and silver. 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.
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