Silver has been taking a hammering over the past week. My average buy price is around $22/oz so I’m still showing a profit, but with the price plummeting I’m seriously tempted to buy some more. Why? Have a read of this article from Eric Roseman of the Sovereign Society…
Why Silver is Correcting Now?
Simply, there’s too much speculative money chasing the silver bull, including hedge fund fast-money and momentum-based investors. Everyone is running to get in.
In India, individual investors have gone wild for silver. India is the world’s largest source of fabrication demand for gold. But investors are increasingly rushing into the white metal instead because it’s so much cheaper. Silver is the “poor man’s gold.”
In the United States, Canada and Europe, dealers are reporting record coin sales as investors lunge after silver. The U.S. and Royal Canadian Mints can’t produce silver fast enough. Supplies are drawing to their lowest levels in decades. That’s another short-term bearish indicator.
Then there’s the Blackrock iShares Silver Trust (NYSE: SLV), now the world’s 12th largest exchange-traded-fund (ETF). Assets have exploded higher since it went public in 2006 at just under 700 ounces. Today, SLV holds more than 17,500 tons of silver! That remarkable increase in assets – mostly over the last several months – is also bad news for the bulls.
And finally, some large-cap silver miners started to stumble with silver bullion near $50 an ounce. All the frenzied buying happened in the physical commodity market… not in the underlying business (which is where the miners operate). That’s bearish price action and indicative of an exhausted move.
Silver must correct. Now, it is.
However, long term, I’m bullish on silver. I see it reaching $75 an ounce.
That’s been my position since I first plugged spot silver at $5.50 an ounce. Seven years later, I still like the metal’s fortunes… especially in an unprecedented environment of monetary chaos and Federal Reserve credit creation.
In addition to being a store of wealth, silver also has countless industrial uses all over the world. It’s in batteries, bearings, electronics and catalysts, to name a few. All these uses for silver are more in demand than ever.
New technologies in solar energy, water purification and medical instruments will keep industrial demand for the white metal surging going forward.
But for now though, here’s what you should do…
What to Do With Your Silver
If you’re long silver, then hold.
If you’re looking to establish a new position, then sit tight and wait for the silver price to come to you.
This summer’s violent, short-term price correction will ultimately provide yet another great buying opportunity for silver bulls on the road to $75 an ounce… possibly $100!