We can take this trade Tim West pinpointed today, since gold retrace slightly and silver hasn't yet, this is an ideal entry for both trades. You should size them using 3 times the daily ATR, to risk a full position on each side. This keeps positions volatility adjusted on each leg of the pair. Hold it, long term, possibly past December 2016. Gold looks like an intermediate term top here, so it's a fairly safe trade.
A good alternative is short NEM/long SLV, which looks to be more overextended even, but the main indicator is this chart right here. Don't set any stops in this trade, just calculate your position size for each leg, based on ATR. Tim West suggested this trade today in the KHL chatroom, and now seems like the perfect time to take it.
If interested in my trading signals, or in personal tuition, contact me privately. I'm offering a considerable discount on a packaged course which includes access to my private trading signals list for a year.
Cheers,
Link to Tim West's chatroom: tradingview.com/chat/ We discuss setups like this often there. Feel free to stop by and subscribe to his indicator pack. If you have any questions ask.
There is only one thing fault with this idea, I doubt very much you will find any long time period in history when Silver has been on the rise and Gold not. They rise together but silver with a higher beta
IvanLabrie
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IvanLabrie
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Yes I know the ratio gold/silver is moving and with a probable top recently. My point was they still move together and especially so when Silver is rising. If Silver is rising faster than gold of course the gold/silver ratio will decline. But what is the purpose to play the ratio when you will earn more just longing Silver?
IvanLabrie
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The ratio is a safer trade right now, since you'd be dollar neutral.
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Ok let me think about that statement for a moment. I gave you an agree cause you made me think :-)
dollarneutral? what does it mean in this context? do you even want to be dollarneutral? Ok now I get it! It is safer because the profit will be less. The difference will be insurance premium. You will slow down the beta of silver. Is that something good? I would not do it.
IvanLabrie
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I'm guessing you never do pair trading...
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What??? How did you reach that conclusion? Please tell
IvanLabrie
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Due to your inquiries, I figure you thought it was a futile exercise.
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I honestly have no idea about your definition of pair trades, but do you have the slightest idea about the complexity of trades you can run into when trading futures, options (w different strikes) and stocks/commodities at the same time