Currently there is a huge divergence between the prices of paper silver(~14 per ounce) and actual physical silver (>20$ per ounce). Moreover due to the global pandemic several silver mines are shutting down. This is a classic situation of high demand for the physical and low supply. If you can't get your hands on physical silver a good trade would be the USLV which is a 3x leverage on SLV (tracks the paper spot price of silver). The paper price will catch up to the physical price soon, with uslv the gains are amplified.
Technical Indicators: USLV daily chart (left side) RSI is reversing from heavily oversold regions as well as the MACD. Volume has been picking up as well.
Gold/Silver Ratio (right side) Before most recessions/global uncertainties gold is the safe haven asset. But silver outperforms gold shortly after that. The gold/silver ratio can be used to evaluate entries and exits for silver. Currently it is over 110 which is a historical high showing very high demand for gold but not for silver. RSI is overbought and is trending down as well as MACD. These show that money is moving slowly from gold to silver.
Note: This is not financial advise. Please do your own research.
Silver has a lot of upside. Go for USLV for amplified gains.
When you say paper price will catch up to physical price soon....how? why? I mean in a fair system, i see it. I don't understand why it will now when they are manipulating it.
I can see people would pay for the paper price and take delivery and then flip it on the physical market (make sense)
but...what makes you think they won't just keep manipulating the price down?
CryptoPaily
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@rawrthis,
The problem arises with the delivery when clients request the silver for their paper holdings. In the current situation, several mines are closed down causing a reduction in available supply. Also air travel is quite limited now, so its not cheap for the exchanges to complete the physical delivery of the silver to their clients (flying out the silver etc).
If you check out websites which are selling physical silver, everyday the availability of different types (coins or bullions) are reducing. Plus if you order it now, you will only get the delivery after a few months.
There is very high demand for gold and silver right now in the physical markets.
If the exchanges cannot fulfill the delivery for their clients, it will result in a huge problem thereby losing trust in paper silver.
In addition, the fed is currently on infinite QE to "revive" the markets, this will most certainly cause significant inflation and cause investors to flock to real assets like gold, silver, bitcoin etc which is already happening.
rawrthis
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@CryptoPaily, Thanks for replying. I get all the points you made and this is why i'm going short term on USLV. Inflation.
Now here's the problem when you said, "If the exchanges cannot fulfill the delivery for their clients, it will result in a huge problem thereby losing trust in paper silver." I'm hearing lately that the Comex and LBMA are getting caught. If people really start taking deliveries, what makes you think they will not just default? What happens to paper silver then? I assume down right (don't invest in papers, they are fake etc. etc.)? That's the question I'm trying to figure out. EVERYTHING points to silver except...paper in my opinion.
CryptoPaily
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@rawrthis, Yes there is a huge risk of default. COMEX and LBMA hold billions of $ in these investment vehicles. I don't think the government or security agencies will let them default just like that. They will be made liable for the settlements. There is a huge manipulation in the paper silver market. I believe the largest derivatives players in the market are artificially keeping the physical silver prices low so that they can fullfil delivery. But this cannot go on forever.
I have more investments in physical silver than paper. I'm trading paper silver, uslv only for short term purpose. I do not recommend paper silver for long term holdings. For that physical silver and gold are the best choices.
andrewau2014
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i can see that the uslv reached 5000+ in 2009.
CryptoPaily
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@andrewau2014, The inception of USLV was in 2011 at the end of the financial recession where gold and silver were pumping up. But ever since that the price has been dropping causing two 10-for-1 reverse splits.
However be more active when you trade 3x ETFs. if the silver price stays steady for too long, USLV will lose value.
I can see people would pay for the paper price and take delivery and then flip it on the physical market (make sense)
but...what makes you think they won't just keep manipulating the price down?