Silver: Heads You Win, Tails You Win More

As much as I talk about the importance of holding gold, let’s not overlook its less expensive counterpart, silver. When gold moves, silver tends to move faster and this should be perfectly fine with volatility-tolerant investors.

What separates silver from many other metals is its utility. Silver has many applications, much like copper does. Yet, unlike copper, silver is known as a precious metal that’s used in jewelry, fine silverware, and so on.

I like copper too, but there’s something about collectible silver bullion that just can’t be imitated. But let’s be completely honest: I’m not just into silver for its value as a collectible metal. I want to see silver’s value increase, and I’m 100% confident that the silver price will revisit its prior peak of around $50 per ounce.

Pretty much every conceivable signal is flashing “buy” right now. The Federal Reserve implemented a “jumbo” 0.5% interest-rate cut. As government bond yields fall, gold will become more valuable and silver will be more “precious” than ever.

From electric vehicle batteries to solar panels, silver’s usefulness is growing and the commodities market knows it. Even the most egregious price manipulators can’t hold silver down for very long.

From a technical standpoint, silver is on the cusp of a long-term breakout. Investors should prepare for retail traders, who are usually latecomers, to see the headlines about silver and start panic-buying, thereby pushing up the silver price even further soon.

Courtesy: BarChart

This is truly the inflection point, with silver ready to break above its highest price in more than a decade. And if you think this is the end of the story, imagine what will happen when silver finally breaks above its decades-long $50 resistance level.

Then there’s the recently released Bureau of Labor Statistics data, which is actually quite bullish for silver. America’s labor market added 254,000 jobs in September, more than what economists had anticipated.

In addition, the U.S. unemployment rate ticked down from 4.2% in August to 4.1% in September. As long as jobs are available, America’s economy should be able to support the type of activity that would require large amounts of industrial metals like silver.

Reduced interest rates are also conducive to economic activity, and are therefore positive for silver. I’m not necessarily expecting another imminent “jumbo” interest-rate cut, but there should be two 0.25% rate cuts before the end of 2024.

The point is that the Federal Reserve can reduce interest rates and economic activity can be robust at the same time, all of which adds up to a silver-bullish outlook. As Renaissance Macro head of economics Neil Dutta put it, “At the end of the day, the Fed is still cutting policy rates even as the economy grows.”

Courtesy: Ronnie Stoeferle

Furthermore, investors should consider a global view of silver’s relative value. Even while silver gains value against the U.S. dollar, it’s also making huge moves against other major world currencies.

So, what’s next for silver? $35 by the end of this year looks like an achievable target, regardless of who wins the presidential election. No matter who you’re voting for, silver offers a “heads you win, tails you win more” proposition for investors.

After this year, the sky is truly the limit for silver. There may be some resistance from “nervous Nellies” when silver hovers near the $50 level, but after the price breaks above $50, I certainly hope you have a position and are ready for huge gains.