It’s been a great year for gold investors…
But another precious metal is doing even better.
If you read the Dispatch often, you know that gold has been surging. It recently “broke out” to a yearly high, signaling that a new gold bull market has likely begun. With a 16% gain, gold was 2016’s best performing asset…until this week.
Yesterday, silver overtook gold as the top-performing asset. Trading at $16.15, silver is at its highest price since June 2015. It’s up 17% this year.
• Like gold, silver had been in a deep bear market…
Since peaking in 2011, silver had dropped 72%…far more than gold’s 45% drop.
Silver’s big turnaround should look familiar to regular Dispatch readers. In February, we told you gold had “carved a bottom” and was likely headed much higher. An asset carves a bottom when it stops falling, forms a bottom for a period of time, and starts moving higher. This signals that buyers have stepped in and given the price a “floor.” It’s a major clue that the asset is ready to climb higher.
Like gold, silver has now completed its carved bottom. In the chart below, you can see buyers stepped in at about $14, keeping the price of silver from falling further. This set the stage for silver’s current rally.
• Silver is gold’s more volatile cousin…
Like gold, silver is real money. It’s preserved wealth for thousands of years because it has a rare set of qualities. It’s durable, easily divisible, easy to transport, has intrinsic value, and its form is consistent around the world.
Unlike paper dollars, which are really just IOUs of broke governments, silver is sound money. Gold and silver can protect your wealth no matter what happens to the economy or stock market.
• Unlike gold, silver is also an industrial metal…
It goes into batteries, circuit boards, and solar panels. Because it’s a key component in many high tech products, silver is more sensitive to an economic slowdown than gold is.
As you likely know, the global economy is not healthy. The U.S. and European economies are growing slower than any “recovery” since World War II. Japan’s economy hasn’t grown in two decades. And China, the world’s largest commodity consumer, is growing at its slowest rate since 1990.
Until recently, the weak global economy has hurt silver. This year, silver is acting more like a precious metal than an industrial metal. Folks who want to “hedge” against slowing economies, a shaky financial system, and erratic stock markets are buying silver to protect their wealth.
• Silver is cheap compared to gold…
The gold-silver ratio, which compares the price of gold to the price of silver, is near an extreme high. The higher the ratio, the cheaper silver is relative to gold.
Today, the ratio is 23% higher than its twenty-year average. As you can see in the next chart, it’s only been this high three times in the past twenty years. Every time the gold-silver ratio reached the shaded area, it quickly plunged back below its 20-year average of 62:1.
This suggests silver has more upside than gold at current prices. And Dispatch readers know that we think gold is heading much higher…
• Gold “carved a bottom” in February…
It’s now up 15% on the year. It’s trading at its highest level since February 2015.
Casey Research founder Doug Casey thinks this is just the start of a historic gold bull market.
Last month, Doug explained why gold is entering a “true mania.” If you haven’t read Doug’s essay, we encourage you to do so. It’s one of the most important pieces we’ve published in years.
In short, Doug says we’re on the verge of a major financial disaster that will dwarf the 2008 financial crisis:
Right now, we are exiting the eye of the giant financial hurricane that we entered in 2007, and we’re going into its trailing edge. It’s going to be much more severe, different, and longer lasting than what we saw in 2008 and 2009.
In a desperate attempt to stave off a day of financial reckoning during the 2008 financial crisis, global central banks began printing trillions of new currency units. The printing continues to this day. And it’s not just the Federal Reserve that’s doing it: it’s just the leader of the pack. The U.S., Japan, Europe, China…all major central banks are participating in the biggest increase in global monetary units in history.
• Doug says the price of gold will at least triple in the coming years…
Silver could go even higher. As we said earlier, it has a lot of “catching up” to do.
We urge you to own physical gold and silver. This is the best way to defend your wealth against a global economic slowdown or stock market crash. Best of all, both metals are cheap, overlooked, and on the rise.
• If you want to make big profits, consider buying gold and silver stocks…
Gold and silver mining companies are leveraged to the prices of precious metals. A small rise in the price of gold can make gold stocks skyrocket. This year, gold’s 15% jump has made the Market Vectors Gold Miners ETF (GDX) soar 58%.
This could just be the beginning. During the 2000-2003 gold rally, the typical gold stock rose 602%. The best gold stocks jumped more than 10x in value.
• Doug says this is one of the best buying opportunities he’s ever seen…
He’s calling it a “speculator’s dream market.”
In the coming years, the average gold stock could soar 500% or more. The best stocks could return 1,000%, 2,000%, or even 5,000%. Silver stocks could do just as well, if not better.
Those types of gains might sound impossible to most folks. But if you’ve ever witnessed a bull market in gold and silver stocks, you know huge, 1,000%+ gains are not uncommon.
Gold and silver stocks are incredibly cyclical. They boom and bust. Right now, these stocks are coming out of a bear market. They’re extremely cheap, but they won’t stay that way for long.
We’ve put together a short video with our best advice for making big returns in gold and silver stocks in the coming mania. If you’re interested, check out this free presentation. But do it soon…opportunities like this only come along once a decade or so. And the buying window usually closes fast.
Chart of the Day
Silver stocks are hitting new highs.
Today’s chart shows the performance of iShares MSCI Global Silver Miners (SLVP), which tracks large silver miners. SLVP has surged 65% this year. It’s now at its highest level since May 2015.
If gold stocks enter the mania that Doug expects, silver stocks should skyrocket too. As noted, silver is even cheaper than gold. And buying silver stocks is the highest-upside way to speculate on higher silver prices.
Delray Beach, Florida
April 15, 2016
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