Hello All,
Take a look at the GSR (GOLD SILVER RATIO) this morning. With the metals pricing rising we should see a steady decline in the GSR, but it not declining , its is rising. What does this mean? If you are bullish in metals, it means upward price movement in Gold over the past 24hrs has been stronger (historically) than the price of Silver , or, another way to say it, silver is lagging behind.
From an opportunity perspective, trading the GSR right now can be advantageous because it means silver still has some more legs to run higher to catch up in price % wise , or , if we see a pull back in prices, gold may fall further than the price of silver, its drop % may be greater (than normal), offering a great hedging opportunity is you still foresee metals pricing rising. How does one capitalize on this opportunity? One could go LONG silver and SHORT Gold to take advantage of this divergence in the GSR, gaining exposure to the upward movement in price while providing a great hedge in case we see a pullback in prices.
Zotbot