By: John Fisher and Chris Weber, Editor: The Weber Global Opportunities Report
The last time a precious metals correction happened was a little over two years ago. At that time, gold hit a low of $693 and silver $9.63. Since then, gold has risen about 100%, but silver has soared 206%. This is an extraordinary occurrence in just two years.
Back in October, both metals were due for a rest – especially silver.
Silver reached $24.75 on October 14th and retreat was expected. Silver briefly touched $23. That is a 7% fall, which in silver is nothing. And then the rise resumed. In December, silver reached a new high of $30.50.
Readers: A $1.75 pullback in silver is nothing. Waiting to buy on a dip may well cost your getting into the market at all.
Silver then refuses to consolidate, barely takes a breath and then reaches new highs.
Why? Some say silver shorts are covering. Probably not! Why? The possibility of silver shorts buying silver to cover their positions has been factored into the price now for some time.
Over the life of that bull market, silver soared from $1.29 to $48: a rise of 3,600%. So far this time, silver has only risen from $4.03 to about $29.50 today. That’s “just” 632% during a similar time period. That’s why, for one reason, we have a long, long way to go.
Silver has only had one significant correction: from $23 to just under $10. But while the percentage correction was typical (over 50%), it was all over in just seven months. A huge and powerful move that quickly returned silver to new highs.
Remember, for a few hundred dollars or the equivalent in other currencies, silver is regarded as within the budgets of all investors, no matter the country. What we think is expensive at $30 per ounce, they consider silver to be a cheap alternative.
Can you imagine what would happen if every investor on earth became convinced they needed to own some silver? $130 to $300 or more doesn’t look so crazy.
Those that are accumulating physical gold and silver are few in number – by most accounts no more than 3%. Those of us who own physical metal believe that many others do as well – if for no other reason than it makes sense. Line up 100 people and ask if they own physical metals – only 3 will raise their hand.
For those who have been waiting to buy or add to their gold and silver holdings, there is no guarantee we’ll have any big correction or consolidation. Then what?
All Things Considered – John’s Commentary:
My best advice to readers is to simply buy or add without trying to time their purchases.
In general, this is what we all should do in a bull market. There have been times when I thought I was clever enough to attempt to time purchases – at least a little. The only time this has worked for me is when I have added to an existing position – not to take a position. I am not that clever. Neither are my peers. My advice is to bite the bullet and accumulate at least some physical silver and gold.
What to buy now: In the short term (less than 1 year), I am favoring gold over silver by a two-thirds, one-third ratio based on the existing gold:silver ratio of 46:1. I expect to reverse that recommendation as the gold:silver ratio moves up. Buy very-low premium gold coins and 90% silver only. There are some very, very low priced buys out there right now. Call us for details.
Quote of the day: “Don’t get in the way of the US government committing suicide.” – Anonymous
