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Gold and Silver ratio spread is narrowing... As previously discussed the ratio is going to widen once it hits an optimal range... A Spread involves buying one security and selling another with the goal of profiting from the narrowing or expanding of the spread between the two items. For example, you might buy gold and sell silver short with the expectation that the price of silver will fall faster (or rise slower) than the price of gold...
Spreads compare two securities to show how the securities are performing relative to each other. Spreads are normally calculated using futures.
A spread is calculated by subtracting the value of one security from the value of another security. To display a spread of two securities, you can create a composite security using The DownLoader (see Maintaining Local Securities, or you can plot the Spread indicator.
When creating the composite with The DownLoader, be sure to select Subtract as the operator type. Enter the appropriate Weighting Factor. Certain futures spreads require that one future have more or less weight than the other. The Weighting Factor may be used to specify the weight for each future in the spread (e.g., a Weighting Factor of 0.40 multiplies the future's prices by 0.40). Entering a Weighting Factor of 1.00 for both futures in the composite gives each equal weight.
--- In equismetastock@xxxxxxxxxxxxxxx, "formulaprimer" <formulaprimer@xxx> wrote:
>
> IF you have MS 10.1 or higher you should have BM Indicators and BM DATA folder..
> So you can plot the gold and silver ratio and have the Gold and Silver chart available if you get the Market Indicator data feed end of day etc... If you don't have that data then the closet thing is the GLD and SLV ETF... To get ratio use used downloader or build indicator basically it is GLD/SLV with the weight factor of 10 to GLD cause it is a factor of 10 less than actual gold price... The natural gold to silver ratio is 25 to 1 but the silver market is manipulated due to the fact that the CFTC etc allows unlimited short positions but limited long positions thus forcing big player to be net short... so the ratio is 60 to 1 and when it gets 40 to 1 it is too close and will widen... that is what pros use for spreads etc.,,,... The inverse to SLV is ZSL and inverse to GLD is GLL etc... I'm sure you can find others...
>
> I'll be posting other I use later...
>
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