2020 Crash Shattered a Key Indicator — Here’s How We Can Make 150% on Silver
- Silver prices were trampled in the sell-off.
- That pushed one key indicator to a 5,000-year extreme. And that’s opened the window for an unprecedented opportunity.
- Matt Badiali shares two ways to play the next giant swing in silver prices.
My publisher shot me an email last Wednesday morning. The subject read:
“The Longest Record Broken: Gold/Silver Ratio Hits Highest in Over 5,000 Years.”
I laughed … at first.
It’s hard enough finding reliable price data past a century. Much less 5,000 years.
But we do have anecdotal data going back to 3,100 BCE (according to the article).
Back then, the ratio was 2.5 ounces of silver per ounce of gold. We’ve never seen silver values that high in the modern day. The average since 1975 is about 61 ounces of silver per ounce of gold.
It’s a ratio that I look at and write about a lot. I last told you about it in the February 24 Winning Investor Daily, that you must buy silver right now.
Since then, the ratio took a crazy turn. Just look at this chart:
The silver price plummeted.
It fell from a February 24 high of $18.63 per ounce to a March 18 low of $11.98 per ounce. As of this writing, the price was up around $14.50 per ounce. That’s 22% below the February high.
The gold price made similar moves, but not as dramatic. It’s only down 3% from its March 9 high price. That’s why the silver-to-gold ratio went ballistic.
Here’s the thing: The ratio could get worse.
Gold is in crisis. It’s difficult to impossible to get gold bullion right now, according to Ludwig Karl in an interview with Bloomberg. He’s a board member of Swiss Gold Safe Ltd. The company stores gold in secure vaults in the Swiss Alps.
Gold coins sell at a 5%-plus premium to the spot price. That means if gold is at $1,600 per ounce, you pay an extra $80 per ounce. That’s the highest premium since 2016.
And with the trillions of dollars from global stimulus set to flood markets, we are in for inflation. There’s little chance we’ll see the gold price come back down if that’s the case.
That means the silver price will soon follow gold higher. And potentially much higher.
This isn’t uncharted territory. In fact, it’s right out of the crash playbook. We saw it happen in 1991, 1995, 2003, 2008 and 2016…
Every time we see the silver-to-gold ratio break out like this, it results in silver prices going up double or triple digits.
The average gain in silver was 147%. The highest gain was 371% in 2008. And the ratio never got this far out of balance back then!
I recommended we jump on this train now, before silver prices soar along with gold. We can buy either the iShares Silver Trust exchange-traded fund (NYSE: SLV) or the leveraged VelocityShares 3x Long Silver exchange-traded note (Nasdaq: USLV).
Editor, Real Wealth Strategist