In this time of economic uncertainty, investing in silver and other precious metals instruments is a must.
By devoting even a small portion of a portfolio to precious metals, investors gain valuable protection against inflation, stock market drops, and any other repercussions from Washington's debt-ceiling drama.
So far this year, investing in silver has been rocky. Silver prices have dropped nearly 30%, likely under pressure in the short term due to sluggish key factors in global markets.
But despite the short-term performance, silver prices are still a whopping 250% higher than its 2008 lows.
And long-term prospects look particularly bullish.
The growing demand for emerging products, China's introduction of silver futures, new movement in India, and continued U.S. government dysfunction all point toward silver market growth.
Taking these factors into account, plus 2013's fresh lows, means right now is a great time to get on board with silver.
So, why not learn how to invest in silver from the very best? Money Morning's 20-year veteran of the resource market, Peter Krauth, tells readers how to play the white metal.
Investing in Silver: Where Prices Are Headed Next
Krauth highlighted several important factors that will push silver prices higher in the coming months:
- Silver has a tendency to follow gold's lead, so our first step is to look at how the yellow metal has been performing. Gold bottomed in late June and then set a new higher low mid-October at $1,275. At $1,350, gold is now trading slightly above its 50-day moving average - a bullish technical signal.
- Silver has followed much the same pattern, and at $22.70 recently traded just above its own 50-day moving average, which is another bullish technical signal.
- In the chart below, I've outlined in blue how the silver price has stayed above the blue support line and recently broke above the wedge formation. The next price targets are $23, then $24.50, then $29, as indicated in orange.
- Over the next few months, silver will likely follow gold's lead, which is bullish as we head into the strong Asian buying season thanks to Indian festivals, weddings, and harvests, in addition to the Chinese New Year. Indians have increasingly turned to silver as a substitute for gold in response to government duties and taxes to slow gold buying.
- Industrial demand for silver is also strong because of growing applications in technology, like batteries, solar panels, and antibacterial applications, just to name a few.
- The gold/silver ratio is around 60 right now. It trended up from 50 to 67 over the past year, but has dropped since August. Look for it to head back toward 45 to 50, meaning silver's price will likely climb faster than gold's.
Two Plays for Investing in Silver Now
Here are two interesting ways to play silver now before the price climbs higher:
- Global X Silver Miners ETF (NYSE: SIL) is a one-stop shop of the larger primary silver miners. This should offer good exposure and leverage to silver, especially as silver equities are trading at historically very cheap levels.
- ProShares Ultra Silver (NYSE: AGQ) offers a two-for-one leverage on the silver price, both up and down, but with no margin calls.
Krauth's expert insight above makes it abundantly clear: Now is a great time to be investing in silver. And here's how to get started.