Look back to 2011 when Silver took a shot at $50.00 an ounce. The high was 48.57 the week of April 25th 2011. A little post- tax day present for all the metal bulls. Sadly, that was the beginning of a 30 month swoon. This March Silver broke through the bottom support of a major weekly trend line support. We were flirting with $30.00 an ounce. That failure took us down to the June low of 18.21. From the high in 2011 to that low, you’re looking at a 30.36 an ounce loss. That’s 62 1/2 % haircut. Did you invest 100 bucks in silver at that high? You’re now looking at roughly $40.00 bucks of value.
In the mean time, the Stock indexes rallied from 12,000 in the Dow to today’s 16,000 level. 4000 pts or a 33% gain in value.
My point is this. Math like this shows you the folly of getting too emotional and too bearish in times of economic stress. For months and months all you heard on TV and radio was the metal bulls pumping up metals as a hedge against the zombie apocalypse. Now looking back on those proclamations of doom and gloom, if you swallowed the hype and left stocks for “something real and tangible you can hold in your hand and bury in your back yard”… you’re feeling the sting right about now, especially as you sit down to look at your 2013 taxes and investment performance.
Which brings us to the question of the day? Is now the time to be stepping in buying metals? After a 62% drop in value, your risk is probably from current 20 dollar level down to the 10 dollar level.
Conventional wisdom has the fed tapering, which should lead to the dollar rallying, and which should then lead to a drop in all commodities.
So, buying Silver on dips today is actually a contrarian play. I tend to like this contrarian play. It might take a while to play out, but I like trying to buy silver here on a dip and I like trying to buy gold against 1220 and 1200. I wrote about gold last week, but I got some emails from people looking to speculate in Silver.
Check out the weekly chart below.
