I was looking at the ratio of the price of gold relative to the price of silver last week. 

Serendipitously, Bespoke offered up a chart of the gold/silver ratio a few days ago.  This is the chart.

I find this chart intriguing.  Going long silver and shorting gold looks like an interesting trade.  The gold/silver ratio is at a decade high. 

However, the chart only goes back 10 years.  Prior to 1998, the the gold/silver ratio was even higher.

This is the ratio since 1984.

The current ratio is 77.  Since 1998, the gold/silver ratio has averaged 60.  Since 1984, it has averaged 66.  The ratio hit 99.7 in February 1991.  So the gold/silver ratio is high, but it has gone higher in the past.

I thought about putting this trade on but have opted not to so far.  Buying silver and shorting gold is essentially a beta play on the economy since silver is used in industrial production more so than gold.  If the economy improves and investors regain confidence in asset markets, this ratio will close.  You can get the same beta exposure to the economy by buying stocks.

Thus, though I find buying silver and shorting gold an intriguing arbitrage trade, I have yet to put it on because I do not know any other reason to think it will close other than an eventual return of confidence to the asset markets.