Hi-Ho, Silver! The Bullish Case For The White Metal
It’s easy to see why gold is regaining its luster as an investment. Inflation is rising, governments around the world are awash in debt, geopolitical risk is worsening, and global stock markets are excessively valued. But many readers are asking me: what about silver?
Fact is, the “white metal” makes even more sense right now than gold.
Jim Fink, chief investment strategist of Velocity Trader, asserts: “The U.S. economy continues to strengthen, which bodes well for silver prices.”
I explain why silver is a smart play now, both as a portfolio hedge and a vehicle for market-crushing growth.
A bigger bang for your silver buck…
Gold and silver are traditional safe havens during times of market anxiety. But when gold prices rise, silver tends to rise even higher. Silver is considerably cheaper per ounce than gold; as gold climbs in price traders perceive a bigger bang for their buck with silver.
Case in point: during the gold bull market of June 2001 to August 2011, gold jumped from $270 an ounce to $1,889 an ounce, for a 600% gain. But over the same period, silver soared from $4 to over $43, for a 975% gain.
Industrial demand also plays a role. Both gold and silver are used in several industrial processes and consumer products, but silver is far more prevalent and crucial. Silver is a superb conductor of heat and electricity, making it an integral component in medicine, electronics, food processing, batteries, solar energy, textiles, and radiography, to cite only a partial list. Silver is found in computers, televisions, smartphones, calculators, cameras, watches, clocks, microwave ovens… the list goes on.
In photovoltaic manufacture alone, demand for silver in 2018 is expected to be about 75% greater than in 2015.
These indispensable uses for silver will continue increasing, even if the economy downturns in 2017 as some analysts fear. The activity in any individual application could dip, but overall silver demand will remain recession-resistant because without this versatile metal, many processes or products couldn’t exist.
The basic supply and demand equation also is favorable for silver. According to the Silver Institute’s 2016 World Silver Survey, there has been a physical silver supply deficit for the past three years because of falling production and rising demand.
The silver strategists at investment bank HSBC (NYSE: HSBC) echo Jim Fink’s bullishness on silver:
“In our view, any resurgence in investor uncertainty or ‘safe-haven’ demand, possibly based on geopolitical concerns, will bolster silver in 2017…
We also base our expectations on solid fundamentals, as mine supply is likely to contract while industrial and jewelry demand should increase. HSBC estimates that the silver supply deficit was 116 million ounces in 2016 and should reach 132 million ounces in 2017.”
How high can silver go? Predictions are all over the map, but consider this: during the uncertain 1970s, the price of silver rose more than 3,600% from its November 1971 low to its January 1980 high. A precedent exists for whopping gains in silver.
Conventional wisdom dictates that portfolios should contain at least 5% to 10% of precious metal assets as protection against economic downturns and market corrections. As this aging bull market staggers through its eighth year, a correction is likely ahead for global equity markets.
Rekindled inflation only makes the case more compelling. The Consumer Price Index increased 2.74% in February 2017 over the same month a year ago. Silver not only provides ballast and an inflation hedge to your portfolio, but it’s also set for outsized growth amid a broader market that’s dangerously overvalued.
Investors are catching on to silver’s appeal. The benchmark iShares Silver Trust ETF (NYSE: SLV) has gained 9% year to date, compared to a gain of 6% for the S&P 500.
The time to make a silver trade is now, before prices of the asset get bid sky high. If you wait until the bloviators on CNBC start flapping their gums about the opportunities in silver, it’ll be too late.
Got a question about silver? Drop me a line: email@example.com — John Persinos
High velocity profits from silver…
For all the reasons mentioned above, the price of silver could skyrocket from its current level of about $17.50 an ounce to as high as $140/oz this year. And that’s a conservative estimate.
To profit from silver’s inexorable rise, you could simply buy physical silver or shares in a silver miner. You’d likely do well, but that’s no way to get rich.
Jim Fink, the seasoned expert behind Velocity Trader, has devised a trading system that leverages even tiny stock movements into triple-digit winners.
With the table set for silver to explode, Jim put together a $1 trade to capitalize on the precious metal’s momentum. His silver trade is positioned to gain a staggering 406% within the next 90 days. There’s still time to get into the action, but the window is closing.