Silver Shoots the Moon

In a break-all-the-rules year that’s seen gold out-perform the market handily in the first quarter, few had their eyes on silver.  That all changed today as the precious metal shot up an astonishing 4% in just hours to a 10-month high,  leading Bloomberg to proclaim it “poised to enter a bull market,” with investors “pouring cash into silver.”  Bloomberg is certainly bullish on the once also-ran metal, pointing out “Silver, which has more industrial uses than gold, has risen more than 20 percent this year and is the top asset in the Bloomberg Commodity Index.”

It’s not just that silver is in high demand in manufacturing, it’s which industries have an ongoing need for the precious metal.  With an array of applications that can only grow, including computers, consumer electronics, smart phones, automotive technology and solar panel manufacturing, silver’s unmatched conductivity and reflectivity make it that unique asset that offers affordability (at least for now) along with virtually unlimited potential.

Nevertheless, this sudden 4% upward catapult is taking experts by surprise, with Business Insider exclaiming, “Silver is going nuts.”  The gain follows a 1st-quarter spike in gold, with some saying the silver rally is the correction of an atypical price gap between it and gold in the wake of gold’s rapid 2016 rise.   Whatever the reason, says BI, “[O]n Tuesday, it is silver that is in focus, with gold pulled higher by silver’s surge,” and Bloomberg noting, “Trading volume for silver in New York was almost triple the average for the time of day.”

What does this mean for middle-class investors, particularly those looking to protect increasingly at-risk retirement portfolios?  For one thing, it demonstrates yet again that precious metals provide something experts believe is going to be more necessary than ever in the coming years: a hedge against stock market-tied and dollar-denominated assets.

In the excitement of a silver rally it’s easy to forget experts including the IMF, Citigroup and more have only bad news about the world economy for the foreseeable future.  The U.S. manufacturing sector is already in a recession.  The oil price collapse means a torrent of defaults is coming, with companies that took out loans with big hopes now poised to default en masse.  The result will be a credit crunch the likes of which we haven’t seen since the ugly days of 2008, when millions lost 25 – 50% of their IRA/401(k)s.  In the ensuing near-decade we’ve all gotten that much closer to retirement and we have to think defensively.

We got fooled once, and the results were devastating.  This time, with so many indicators pointing to economic trouble ahead, this silver rally is a clear sign we need to take advantage of what’s offered and also take matters into our own hands.  Reminds me of the story about the man trapped by a flood who kept refusing rescue because he knew God would save him.  Sometimes you have to see the signs and act on them.  Even with today’s spike, silver is still affordable, especially when you’re buying with funds you already have saved.  So rolling over your IRA or 401(k) to a gold and silver IRA is, today, the biggest no-brainer ever.