SILJ : RESET / POSITION TRADE
SILJ is likely to outperform the metal on the next leg higher
Now could be the perfect time to purchase silver mining shares on a scale-down basis before the next leg to the upside.
Silver mining shares tend to outperform the price of silver on the upside and underperform during price corrections. Therefore, they act as leveraged tools for the silver market. Most leveraged products involve time decay as they use put and call options to create the gearing. However, silver mining shares have no expiration dates. The leverage comes from the ability to extract more silver at higher production costs from the earth's crust as the price of the metal appreciates.
As we return to a more normal economy, we are going to face challenges. No one knows what is ahead. The 10 year note is beginning to indicate that there are some inflationary pressures. Rates have hit 175 as a recent high. The 10 year note is anticipating inflation. But interest rates cannot go up. In the 1970s, even though we had inflation, the debt was not that much of a problem and the US dollar had just come off the gold standard, so we could print a lot of money. Today, we are in a very different situation. We have massive debt of almost $30 trillion and the US dollar has lost most of its value. As the government prints more and more money, the dollar will continue to lose value, and gold and silver are becoming increasingly attractive investments.
REFERENCES :
EQUITY MANAGEMENT ACADEMY, 17 Apr 2021, SeekingAlpha
seekingalpha.com/art...t-supplies-inflation
ANDREW HECHT, 23 Mar 2021, SeekingAlpha
seekingalpha.com/art...e-to-load-up-on-silj
Now could be the perfect time to purchase silver mining shares on a scale-down basis before the next leg to the upside.
Silver mining shares tend to outperform the price of silver on the upside and underperform during price corrections. Therefore, they act as leveraged tools for the silver market. Most leveraged products involve time decay as they use put and call options to create the gearing. However, silver mining shares have no expiration dates. The leverage comes from the ability to extract more silver at higher production costs from the earth's crust as the price of the metal appreciates.
As we return to a more normal economy, we are going to face challenges. No one knows what is ahead. The 10 year note is beginning to indicate that there are some inflationary pressures. Rates have hit 175 as a recent high. The 10 year note is anticipating inflation. But interest rates cannot go up. In the 1970s, even though we had inflation, the debt was not that much of a problem and the US dollar had just come off the gold standard, so we could print a lot of money. Today, we are in a very different situation. We have massive debt of almost $30 trillion and the US dollar has lost most of its value. As the government prints more and more money, the dollar will continue to lose value, and gold and silver are becoming increasingly attractive investments.
REFERENCES :
EQUITY MANAGEMENT ACADEMY, 17 Apr 2021, SeekingAlpha
seekingalpha.com/art...t-supplies-inflation
ANDREW HECHT, 23 Mar 2021, SeekingAlpha
seekingalpha.com/art...e-to-load-up-on-silj
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