To begin with you need to understand the triggers for the price movement of gold and silver before taking a trading call. One can argue that both gold and silver are precious metals and hence they are safe haven investments. Then why does the ratio fluctuate? It has to do with demand patterns. That is what you need to fathom. The price swings for gold happen more from central bank and ETF buying. That means gold is more of a hedge against uncertainty. Silver finds nearly 75% of its usage in industries like electronics and hence silver demand linked to industrial cycles. If you look back at the last 10 years of the gold/silver ratio, it has gone as low as 35 in 2011 and as high as 92 in 2019.

Instead of worrying about long and short, use the gold/silver ratio for pair trades. When the gold/silver ratio had touched 35 in 2011, it was a signal to either buy gold or sell silver. While selling in silver would have been a great trade, a buy on gold would have been disappointing. A better way would have been to go for a pair trade where you bet on relative outperformance rather than on specific assets. Now that the ratio has overshot above 80, that is the kind of trade you should consider on the opposite side.