Gold and Silver futures

Discussion in 'Commodity Futures' started by cml2949, Jul 26, 2006.

  1. cml2949


    Hi , I'm fairly new to this market.. Any opinions or comments is appreciated.. Even if you can direct me in the direction of how to find these answers will help..

    Thanks in advance!

    1. anyone ever trade gold ZG against silver ZI or vice versa.. does it have a close hedge ratio, which is? (for every Buy ZG you have to sell so many ZI)

    2. would you say that ZG and ZI move tick for tick..

    3. does silver futures move tick for tick with the ETF SLV?
  2. ids


    1. The ratio is 3 ZG to 5 ZI. CBOT offsets margin 70% with this ratio.

    2. No. Gold is more liquid product.

    3. I do not know.
  3. 1. the ratio can change sometimes so be very careful when trading it ... also
    the spread in silver sometimes kills any edge you might have
    so be careful in how you enter or exit ZI or YI

    2. usually a $1.00 move in ZG is equal to a 1 - 5 cent move in ZI
    depending on if people are rushing into or out of silver
    as it is less liquid a market

    3. SLV will track ZI + YI but trying to arb it or trade it is very very tricky esp ... with the AMEX specialist or the ECNs

  4. cml2949


    For IDS: i dont understand what your saying for the first question.. for every 3 zg i have to offset it with 5 zi to be flat?

    right i noticed that gold was more liquid than silver.. would you say that they have a high correlation at what % you think?
  5. ids


    Yes, it is the proportion to be as "flat" as possible. At least 70% of correlation is what CBOT itself believes.
  6. cml2949


    thank you all

    how did you come up with the 3 to 5 ratio? can you explain that to me ....
  7. ids


    That is the proportion set by the exchange for maximal margin offsets. I know it because I know how SPAN (the margin system) works. As SethArb said, real life will deviate from it but still, it is probably the best you can have.
  8. cml2949


    I haven't had anyluck with some of my other questions on here.. Maybe wrong approach..

    BUT thanks IDS SETHARB , I appreciate the responses, they helped out.. I will pass on this info to my buddies ..
  9. COMEX silver warehouse supply down to 100 mm oz.....

    interesting to see if the bar hoppers can gun it lower.........
  10. fwiw, they finally broke 100 mm oz. level.....

    been awhile for that....
    #10     Jul 28, 2006