By Brad Zigler
September's been a good month for traders banking on a decline in the gold/silver ratio.
When we first looked at the potential for a breakout move ("How To Trade The Gold/Silver Spread"), the ratio — basis the December COMEX contracts — was 64.4-to-1. In other words, one ounce of gold was "worth" 64.4 ounces of silver. Since then, both gold and silver have climbed, but at different paces. As of Monday's settlement, December gold's risen 4.0 percent vs. silver's 10.7 percent gain.
The outsized appreciation in the white metal has pushed gold's price multiple down to 60.5x and lined the pockets of spread traders. The return on margin — assuming exchange minimums were obtained — has been 133 percent. Not bad for 17 trading days. (more)
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