Useful Ratio Strategies
There are several means available to investors that will teach them how to trade the gold silver ratio. Even without substantial funds, one can leverage certain financial instruments that will provide the investor with profits. The futures market is one such example, allowing an investor to purchase securities on margin. An even safer way to get involved would be through exchange traded funds, or ETFs. Of course, investing in either of the above two ways commits the investor to an ''all or nothing'' strategy, either your call pays off, or it doesn't.
One popular strategy is to keep an open position on a futures trade or an ETF and keep adding to the position depending on where the ratio goes. If it rises, buy more silver positions. If it contracts, then switch to gold. This strategy protects the investor from taking what is essentially a wild guess on where the ratio is going to go, of course the trader pays for this safety margin with lower returns.
There have been hundreds of riskier strategies published, but of these the most consistent promises a kind of arbitrage. This involves the purchase of put options on gold and call options on silver when the ratio is high and the opposite when it's low. The "bet" is that the spread will diminish with time in the high-ratio climate and increase in the low-ratio climate. Of course, the historically wider time spread usually required for significant changes in these two metal's prices dictates that an investor interested in employing this strategy should use long-dated options, or leaps when taking out his positions.