The price ratio between gold and silver is currently 80:1, near the highest level in 15 years. It has averaged 60:1 during that time, falling to as low as 40:1. It was 55:1 in August. Would going long silver and shorting gold be a good pairs trade right now? Why or why not? Also, the ratio was as high as 120:1 in the 1980s and the average ratio was much higher during that decade. Does anybody know why it was so high in the 80s?
In terms of industrial use, silver lost some value when photography went digital. Silver also has a history of lagging gold. Other ideas about this is that Silver is more plentiful and much harder to manipulate. Hence the banksters hate it with a passion. They can work the physical gold market, as they have back in 18th century. Either Gold is overpriced or silver is underpriced. Something has to to budge. One thing to look at is that during Gold & Silver's last run up, Silver went up triple digits while Gold went high double digits. Personally, I like physical silver cause there are more opportunities to make money on it now by trading it. Gold, not so much.
How do track your gold Silver spread? Im trying to set up a chart for it but am stuck with what calculation to use.