Silver And Gold: Why Being Late Is Great

Normally the word late has a negative connotation. Not in this case. The historical fact that Silver is lagging Gold can be used as an edge for investors. Being late is great. Not needing to be first translates into less risk. Gold being in a secular bull market makes it pricey to attain. Silver prices in comparison are just starting to rise. Typically, Silver outperforms Gold later down the road. It moves later but overall it moves further and faster.

This isn’t all. Did you know that recovering Silver in most cases isn’t worth the effort? While Gold gets “refurbished” out of all kind of junked tech items, Silver isn’t. This means it is lost and its overall supply diminishes over time.

Gold/Silver-Ratio, Monthly Chart: Being Late Is Great/h3

At this moment of time it takes about 100 units of Silver to purchase one unit of Gold. The monthly Gold/Silver-Ratio chart above illustrates that nine years ago it took only 31 units to accomplish the same purchase. Relationships like these rarely stay long in extreme measurements like the two mentioned. Consequently, it is quite reasonable to assume that we will at some point find ourselves near the 200 moving average, a value between those two extremes more likely in the future. Once Silver which is always late and lags, catches up with Gold’s extension, this medium Gold/Silver-Ratio zone will be reached. This means there is a force in place driving Silver prices still higher.

Silver, Daily Chart: Catch Up Game, A Strong Climb/h3

We posted numerous entries and exits live in recent weeks. One reason that supports our activity is the strength of the up-move. Not only did we have a staggering above 50% up-leg as a whole, but the give away is the atypically small retracements in price. Looking at the red down percentages in the above daily chart of Silver you will find that bears weren’t in charge for significant profits.

Silver, Daily Chart: Aggressive Reloading/h3

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

On 5/22/2020 we took a long entry before a holiday weekend. Our first target was met on 5/26/2020. Risk was eliminated via taking off 50% of our position (=financing target) and first small profits were secured in this way.

It is this urgency of Silver to catch up even on the smaller time frames, that leads us to take aggressive entries. Most think after a move from US$11.639 to US$17.629 (a +51.46% move) one would be late to the party. Then again, being late is great. Once the bullet train is in motion there is no reason to be timid. You might not want to be aggressive in your position sizing if this is your starting point with your first position in Silver. But you certainly don’t want to sit and wait while watching prices for a long time running away from you. Our quad exit strategy allows for participation with smaller size while building a sizeable exposure to the Silver market over time!

Being late is great/h3

It seems that in the investment world it is best to be in early. Get data ahead of the crowd. Be prepared early. And all of this is true of course. And then again, in this specific case betting on the less shiny option versus Gold is a grand opportunity. History has shown that Silver more often than not has outperformed Gold in a bull market at a later stage. Gold has already shown its strength and with the fiscal uncertainties (e.g. excessive quantitative easing) fundamentally a continuation is very likely. This means Silver might not just catch up with Gold, but could easily be from a profit percentage perspective the more attractive investment vehicle. We highly recommend ownership of physical Silver as well, for the long term investor.