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| By Jim Nelson |
Something big is happening in a market that doesn’t get nearly enough credit — silver.
We obviously think of silver as a metal used in jewelry and in bar and coin form for investors.
It is also used in electronics, solar panels and even medicines.
That makes it more useful than gold in many ways. But it also means it carries additional downsides if the economy turns south.
Of course, those additional uses can help at times, EVEN IF the economic landscape gets rocky.
You see, it is more often a byproduct than a primary metal when mined.
Most of the world’s new silver produced comes from zinc, copper, nickel and other mines.
That means even if the economy slows down and demand for silver drops, so will its supply.
After all, those base metals we just mentioned will drop in value, too.
In fact, they will drop even more, which means mines could shutter … cramping silver’s production.
And the silver supply situation is already a problem.
As our resource expert Sean Brodrick pointed out a few weeks ago, there already isn’t enough silver coming out of mines — or being recycled — to keep up with demand:
But even if we set aside all these reasons why silver makes sense to own right now, there’s another even larger one — silver skyrockets when gold rallies.
As you can see, every time gold (in blue) jumps in price, silver (in orange) rockets higher, faster.
And it might be hard to see, but if you look at the right side of the above chart, silver has so far lagged gold during this most impressive rally.
That could change. And it may be right now.
As you can see, silver just tested its 13-year high. And it could break out.
There are more macro reasons for this.
Historically, when the global economic environment hits the skids or becomes uncertain, investors flee to Treasury bonds.
That’s not happening right now. In fact, the opposite is occurring:
From September of last year until now, the yield on 30-year Treasury bonds has jumped a full percentage point to 5%.
It is sitting just below that after a short respite over the past two weeks.
Bond yields move inversely to prices. So, that’s a huge indication of selling.
And as the market got choppy in April, yields started really climbing.
Where are investors heading if not to the safety of U.S. debt? So far, gold.
But as gold has already pushed toward $3,500 per ounce, more eyes will look toward silver for its own safe-haven attributes.
So, how should we play it?
There are two easy ways, each with their own advantage.
The 2 Easiest Ways to Jump on the Silver Rocket
First, consider adding a small allocation of the iShares Silver Trust (SLV).
This ETF directly holds silver and trades right alongside the price of the metal.
Its 0.5% expense ratio makes it a low-cost way to invest in silver without needing to find storage for physical metal.
The second is the Global X Silver Miners ETF (SIL), which owns the largest silver miners in the world.
But as mentioned, silver is more often a byproduct of mining for other metals. So, this can be tricky. Few of these are pure plays.
Still, it’s an easy — and relatively cheap, with its 0.65% expense ratio — way to play the companies leveraged to silver’s upside.
And as you can see, when silver goes up, miners can go up much faster:
Ok, I lied. There’s a third, equally easy way to take advantage of silver’s inevitable rally — watch this presentation.
In it, Sean — noted above as our resource and precious metals guru — takes a deep dive on why both gold and silver have a long way to go before their rallies end …
And several specific ways to play them.
These are even more leveraged to silver’s upside.
Give it a watch before they make their next move.
Take care,
Jim Nelson
