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## Comments

stockcharts.com/videos/?st=ratio+chart&fv=usvs-ca-ratiotickersymbols

BTW, $GOLD:$SILVER is an interesting and strange ratio.

I have done some thinking about this. Here is what I have so far:

First, as a ratio chart, you can see that Gold is under-performing Silver at the moment:

Second, as a price chart, you can see "Gold adjusted to or for the price of Silver", or maybe "Gold in terms of Silver". This price chart lets you see the trend of Gold vs Silver. For example, price (it's really a ratio on a price chart) is at the 50 day SMA, and the 50 day SMA is above the 200 day SMA. Also, the long term trend is up since the 200 day SMA has a positive slope. So, in terms of doing a conversion for your benefit, wait for a dip below the 200 day SMA like in the middle of May, or when RSI is oversold:

Third, the end closing value on the price chart is 74.19. (The 74.19 is unit-less since it's a ratio.) So, lets say I have $100 USD worth of silver. On the Silver price chart, the price is $14.76 at the moment. I think this means $14.76 per ounce? I believe the 14.76 value is USD. So, $100 USD in terms of silver is 6.78 ounces of silver.

Now lets take 6.78 divided by 74.19 = 0.09 ounces of gold. (I thought I had to multiply, but I ended up dividing instead; not sure why?)

So, the 74.19 helps you to convert ounces of silver to ounces of gold by dividing.

I have seen previously a ratio like this: $SPX:$$CPI. This is read as "The S&P 500 adjusted for inflation". This is where I get the "adjusted to/for" terminology. I am still trying to understand what this terminology means and how to interpret it. Also, see this post for a similar example:

http://scan.stockcharts.com/discussion/496/is-it-possible-to-chart-gold-in-canadian-dollars

@Foodguy : "how many ounces of Silver it Takes to Buy an ounce of Gold". Yes, I think you are on the right track.

Did I do this correctly? Anyone see anything wrong? Hi @gord

So wouldn't that mean it takes 74.19 ounces of silver to buy one once of gold?

So, if that number (74.19) rises - say to 81, gold is getting more expensive in terms of silver, because now it takes about 7 more ounces of silver to buy one ounce of gold.

If the number falls, say to 69, gold is becoming less expensive in terms of silver, because it takes about 5 fewer ounces of silver to buy one ounce of gold.

So, as the video says, if the line is rising, the first term in the ratio (in this case $GOLD) is doing better (rising more - or falling less) compared to the second term. If the line is falling, the first term is doing worse (rising less or falling more) than the second.

Thanks for the comments. Nice perspective.