A technical analyst is recommending a so-called relative value strategy that calls for a short position in silver exchange traded funds and a long position in gold ETFs.

The recent outperformance of silver against gold has pushed the gold-to-silver price ratio to a multi-decade low of roughly 30 to 1, according to GoldAlert.com.

However, Chris Kimble, head of Kimble Charting Solutions, thinks that the pattern is set to reverse, and that gold will do better than silver. This means that if the metals rally, gold will outpace silver on the upside or if metals fall, silver will fall further than gold on a percentage basis, he explained in a note to clients.

“How can we lose on this position?  We can if silver continues to rally more than gold or if gold falls more than silver,” Kimble wrote. “With the degree that silver is up over gold, this looks like a good time to put this position in place.”

In the metals complex, he suggests a trade representing 15% of the portfolio, with 10% in SPDR Gold Shares (NYSEArca: GLD), and 5% in ProShares UltraShort Silver (NYSEArca: ZSL).

ProShares UltraShort Silver is designed to produce daily returns that correspond to 200% of the inverse performance of silver bullion.

Kimble said he would reconsider the position if silver blows through $53 an ounce.

Full disclosure: Tom Lydon’s clients own GLD.

The opinions and forecasts expressed herein are solely those of John Spence, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

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