Silver Rallies to Its Highest in over a Year, Plays ‘Catch Up’ to Gold’s Gains
The comments below are an edited and abridged synopsis of an article by GoldCore
Silver could hit $30 within 18 months if the following were to happen: Brexit fears manifest in a UK/EU recession (75% chance); worries about stalling global growth and central banks unleashing more QE/money printing, making rates even more negative globally (75% chance); gold starts attracting speculative money, pushing safe-haven bids up to perhaps $2,500 (70% chance); the gold:silver ratio reverts back to its 200-day moving average of 86:1, taking silver to $30.
If we enter a full-blown crisis, we could see a gold:silver ratio of 20:1. If gold hits $2,500, it would suggest a silver price of $125. Some estimates say that silver’s inflation-adjusted price is $600 an ounce.
Precious metals should make up no less then 10% of investable assets (excluding home and business) in normal times. If you believe we are not in normal times and that downside risks are building, or you are worried about the risks in the broader market, you could increase this allocation.
Many believe that the markets are underpinned by an official sector pyramid scheme, where money is printed and used to pay off old debts and pump up the broader markets, ignoring fundamental capitalist tenets like market pricing, supply, demand, etc. Gold and silver are key in attaining personal sovereignty for the small investor. If you wonder what lies ahead, perhaps look at the central banks’ published plans to address the next banking crisis.
Investors who entrust their deposits, which bear negative real interest rates, to banks are ill-prepared for what is likely coming. It is prudent to allocate at least 10% of investable assets to safe-haven assets such as gold and silver. Within this allocation, 75% gold and 25% silver represent a balanced holding.
Assets must be kept in allocated and segregated vaulted storage in safe jurisdictions. Do not invest in ETFs or in digital online pooled holdings where you are mixed in with other investors. Your holdings must be segregated and allocated. This preserves your legal proximity to your holding and gives you a higher price than proxy metal investments that have significant counterparty risks.