Category Archives: Metals

Looking For That “Silver Lining”… Be Careful!

Like many of you, through the years I’ve become a long-term buyer and accumulator of physical silver. It started in the late-90’s as an investment idea, but as of late (with falling prices) I’m going to start calling it a “hobby.” Up until 2007 I was slowly building my collection with prices well below $10 per ounce. Not only was I looking at silver as longer-term hedge against a potential collapse in the US dollar, but more importantly silver’s increasing usage as an industrial metal. Everything about my investment was moving along as planned, then in 2008, slowing global economies dropped the industrial demand for silver by about 25%. Basically, as investment dollars and consumer purchases in auto, solar and electronics fell, the price of silver was cut in half, from just above $20 an ounce to below $10 an ounce in the blink of an eye. Once again I was a small buyer on the break. This proved to be a smart play as prices quickly rebounded and eventually surged to a high of nearly $50 per ounce in the spring of 2011. The problem is I’ve never pulled the trigger and made any sales. In fact I was a small buyer again in the summer of 2013 when silver prices first pulled back below $20 per ounce. As I sit here now I’m thinking I should have waited for another pullback to below $10. There’s article after article circulating in the trade right now about how The U.S. Mint has ran out of American Eagle silver coins. Bloomberg recently reported in October U.S. Mint sales jumped 40 percent to 5.79 million ounces from a month earlier to the highest since the record in January 2013. The Royal Canadian Mint is also reporting a massive jump in consumer purchase. In other words, everyone believe Silver prices are drastically oversold and way too cheap. My question is, when’s the last time the investment public was correct in their thinking? Yes, I know that the “gold-to-silver” ratio is supposedly all out of whack and silver is the hidden gem. But as the US dollar looks poised to continue its surge to higher ground and “deflation” rather than “inflation” plays the lead-role, the price of silver may continue to struggle. ​W​ith this in mind, I’m choosing to sit this so called perfect investment buying opportunity out. Simply said I’m going to wait for even lower prices before I add any additional pieces to my “collection.” I’m also going to try and convince myself and my wife that it’s more of a “hobby” than an “investment”… it just feels so much better:) Below is a 25-year continuous Silver chart (source: Barchart.com). As you can see we’ve spent a lot of time in the sub-$10 range.