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Initially posted in 2019.
I was a buyer of silver bullion since silver crossed the 80 mark. That included adding significantly to the holdings during the steep drop earlier in the year.
It hasn't always been a comfortable trade, but it has worked out rather well to date.
What I expect next is, despite continuing tail-winds for bullion, the G/S ratio will head back towards the 50 line of the RSI/MACD. So both gold and silver will continue to gain as the money printing / negative nominal and real yields on bonds / geopolitical uncertainty / record-breaking government deficits / shortages of physical bullion etc environment continues (I expect at least 4 out of these 5 conditions to continue for at least 5 - 10 years). Silver will continue to gain at about a 2:1 ratio to gold despite overall % gains slowing down somewhat for a time (smaller, less liquid market). So the G/S ratio will level-off for a while before head further down - I HOPE to 45 or below - at which point I will sell silver and purchase (more) gold.
Silver is a swing trade only as a way to gain more physical gold. I have actually bought my first silver ETF this week (my silver holdings are less than 1% ETF and gold is 0% ETF). Sorry I digress, I a strong aversion of bullion ETFs and would be very uncomfortable with any significant portion of my bullion allocation being in ETF form - if you don't hold it in your hand, it isn't yours). Gold isn't a trade and I would be unlikely to ever willingly part with it and will probably continue to add to holdings (even at much higher prices) for a very long time. Gold is unsurance, money par excellence, and the best way to hedge holding a weak base currency.
If it all works out I will end up with well over twice (by weight) the amount of gold (almost 3:1 for some purchases earlier in 2020), as compared to the amount of gold I could have bought at the time I purchased the silver. I'm just using silver as leverage against gold. Medium term, an $80+ price is on the cards (yes I know that sounds rather speculative right now) and at a 1/45 ratio that would imply a gold price of only $3,600 an ounce. Remember both BofA and Goldman expect a $3000+ gold price before the end of 2021, so my trade could realistically be completed in 2021-22 (I set a 2-5 year time horizon on this trade in 2019). On a bit longer 5+ year time horizon, $5000/oz gold is more likely than not at the moment. Of course, that implies a significantly weaker USD - but we are already starting that journey as well.
Protect those funds (and your bullion).
Initially posted in 2019.
I was a buyer of silver bullion since silver crossed the 80 mark. That included adding significantly to the holdings during the steep drop earlier in the year.
It hasn't always been a comfortable trade, but it has worked out rather well to date.
What I expect next is, despite continuing tail-winds for bullion, the G/S ratio will head back towards the 50 line of the RSI/MACD. So both gold and silver will continue to gain as the money printing / negative nominal and real yields on bonds / geopolitical uncertainty / record-breaking government deficits / shortages of physical bullion etc environment continues (I expect at least 4 out of these 5 conditions to continue for at least 5 - 10 years). Silver will continue to gain at about a 2:1 ratio to gold despite overall % gains slowing down somewhat for a time (smaller, less liquid market). So the G/S ratio will level-off for a while before head further down - I HOPE to 45 or below - at which point I will sell silver and purchase (more) gold.
Silver is a swing trade only as a way to gain more physical gold. I have actually bought my first silver ETF this week (my silver holdings are less than 1% ETF and gold is 0% ETF). Sorry I digress, I a strong aversion of bullion ETFs and would be very uncomfortable with any significant portion of my bullion allocation being in ETF form - if you don't hold it in your hand, it isn't yours). Gold isn't a trade and I would be unlikely to ever willingly part with it and will probably continue to add to holdings (even at much higher prices) for a very long time. Gold is unsurance, money par excellence, and the best way to hedge holding a weak base currency.
If it all works out I will end up with well over twice (by weight) the amount of gold (almost 3:1 for some purchases earlier in 2020), as compared to the amount of gold I could have bought at the time I purchased the silver. I'm just using silver as leverage against gold. Medium term, an $80+ price is on the cards (yes I know that sounds rather speculative right now) and at a 1/45 ratio that would imply a gold price of only $3,600 an ounce. Remember both BofA and Goldman expect a $3000+ gold price before the end of 2021, so my trade could realistically be completed in 2021-22 (I set a 2-5 year time horizon on this trade in 2019). On a bit longer 5+ year time horizon, $5000/oz gold is more likely than not at the moment. Of course, that implies a significantly weaker USD - but we are already starting that journey as well.
Protect those funds (and your bullion).
Comment:
June 2019 post;
Comment:
I could see gold going to USD1800 (1:1 extension of the previous correction) within the next week or two. Silver is doing more than a 2:1 move during the correction. Potentially USD1800, GS ratio back at 90 with silver returning (briefly) to $20/oz. Could be, let's see. If so, it would be a good time to add to silver positions.
Comment:
We just moved above a G/S ratio of 80 today. Time to move some funds. But gold is still only at $1883, so it could go a bit lower - say 1770-1850 which would drive silver to... I don't think lower than $22.7 right now.