1 Chart That Shows Why Gold Will Rally, and Why Silver Will Lead the Way

A week ago, I told you why you needed to buy silver immediately. I hope you listened. Because the white-hot metal is taking off. What’s more, it just gave a signal that there are higher prices ahead for both silver AND gold.

First, you need to know that the price of silver has gone up for eight out of the last nine trading sessions. It’s at the highest price in more than a year. But … and this is a BIG but … it’s still cheap.

It’s cheap in many ways. But it’s especially cheap compared to gold.

The chart below shows gold-silver ratio …

 

The gold-silver ratio shows how many ounces of silver it takes to buy one ounce of gold. In the first week of July, the gold-silver ratio peaked at 96. You can see it in that yellow circle on the top right of the chart.

That was a historical high. But the really interesting thing is what happens next.

In the past, a peak in the gold-silver ratio coincided with rallies in both silver AND gold.

Why? Because silver is the more speculative metal. In a bull market — like is starting now — speculators rush in. And in precious metal bull markets, speculators buy silver.

And silver is hot! The price of silver is up about 8% in July. It’s on track for the best monthly performance since December.

What’s fueling this rally in silver? The same things fueling gold’s rally: Negative real interest rates. Central banks around the world that are ready to ease from here to eternity. ETFs that hold physical metal buying silver.

And prices have been so low, for so long, that no one has bothered to build new mines.

Silver has one thing going for it that gold doesn’t. Silver is an industrial metal as well as a precious metal. A whopping 55% of silver demand comes from industrial fabrication. So, that’s a bullish force, too.

Yesterday saw a breakout in silver and silver miners. The next catalyst could be the European Central Bank’s regular monetary policy meeting today. The ECB is expected to ease its monetary policy even further. Next week, the U.S. Federal Reserve’s Open Market Committee (FOMC) has its money policy meeting and is expected to slash its benchmark interest rate.

Like last week, I’m recommending you buy the Global X Silver Miners ETF (NYSE: SIL).

That’s still a good recommendation. Get long. The profit train is rolling … you don’t want to miss it.

All the best,

Sean

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Comments 2

  1. Bob p July 31, 2019

    I bought SIL options last week on your recommendation. Now down almost 20%.

    Reply

  2. STEVEN LANZILLOTTA July 30, 2019

    Sean,
    You are the best! As a new investor, I’m following your reco’s with small deposits in my brokerage account.
    I recently bought 500 shares of NRGOF.
    Today, I am investing about $150. If it was you, would you go with 5 shares of SIL or 10 shares of SLV?
    Thank you so much.

    Steve Lanzillotta
    Rockland, MA

    Reply