What is the ratio of gold and silver

What is the ratio of gold and silver

For lovers of hard assets, gold and silver ratio is a common argument, but for ordinary investors, this mysterious indicator is anything but popular. As the use of some effective methods that rely on this ratio is expected to have a great profit, which is unfortunate.

Silver proportional representation in short, it requires a lot of silver ounces to buy a single ounce of gold. It sounds basic, but this ratio is more helpful than you think. Continue reading to find out how you can take advantage of this ratio.

What is the ratio?

When the price of gold at $ 500 an ounce, silver trading at $ 5, traders refer to the proportion of gold and silver is 100. Proportion floats Today, gold and silver valued daily by market forces, but this has not been the case constantly. The ratio has been completely set up at different times in history - in a different place - by the government to seek financial security.

Here's a thumbnail overview of the history.

2007 - This year, the average ratio of gold and silver is 51.

1991 - When the silver hit lows, this proportion to a head of 100.

1980 - the last time the wonderful surge in gold and silver ratio of 17.

19th century - is almost universal, fixed ratio 15 at the end of the period bidirectional metallism closely.

Roman Empire - the ratio is set to 12.

323 BC - the proportion was 12.5 after the death of Alexander the Great.

These days, gold and silver trading basic synchronization, but the proportion of stage rise or fall, you can think about was "extreme level." These "serious" level Development trading opportunities.

How to trade gold silver ratio.

First, the sale of gold and silver ratio is an activity mainly take the "gold bugs" and other hard assets enthusiasts. Why? As trading on the premise that accumulate large amounts of metal, rather than enhance the value of the dollar profits fact. Noise confusion? Let us look at the instance.

Trading in gold and silver ratio is essentially the ratio of fluctuations when switching held to determine the history of "extreme." Therefore, as an example:

When a trader has an ounce of gold has risen to an unprecedented 100, traders would then sell his / her single ounce of gold 100 ounces of silver.

When the proportion, and then contracted to an opposite historical "extreme" of the state, 50, the trader will offer his or her 100 oz 2 oz of gold.

In this way, traders will continue to collect more and higher metal content, as "serious" ratio figures from trade and optimize his / her shareholding.

In trade, remember, no dollars worth are considered. The relative value of the metal is considered worthless.

For those devaluation, deflation, currency substitution - even war concerns - is of great significance. REE has a proven track record, maintain their value, in the face of any contingency that may threaten a country's legal tender value.

Trade shortcomings.

Obvious difficulties with the industry to correctly identify these "extreme" relative assessment of metals. If the ratio hit 100, you offer your gold and silver, then the proportion continues to expand, in the next 5 years, floating between 120 and 150, you're finished. A new precedent transactions actually been visibly set into gold trading, during which proposed holding metal contraction.

Some may continue to silver holdings continue to increase, and wait for a contraction ratio, but absolutely nothing is concrete. But also pointed out the need to successfully keep track of the proportion of medium-and short-term changes, in order to capture more of the most likely "extreme" as they appear.