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Buy Silver Now!

By Peter KrauthCommoditiesDec 23, 2020 09:56AM ET
www.investing.com/analysis/buy-silver-now-200548807
Buy Silver Now!
By Peter Krauth   |  Dec 23, 2020 09:56AM ET
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In many ways, most of us can’t wait to put 2020 behind us and call it last year.

We’ve experienced a once-a-century global pandemic, infecting almost 80 million people. Lockdowns caused businesses to shutter and soaring unemployment, with massive economic consequences.

If you dig a little deeper, other costs include soaring debts and deficits worldwide. We’re approaching an unfathomable $280 trillion in global debt. Governments and central banks have facilitated tens of trillions in stimulus spending this year alone, and it’s far from over.

The U.S. is now passing its latest $900-billion stimulus bill, promising new stimulus checks, boosting unemployment, small business aid, and funds for schools and universities.

It’s little wonder that some asset classes have been riding this wave, not the least of which is silver. And looking ahead, the metal appears primed for another great year in 2021.

Debt, Deficits And Stimulus Boosting Silver

2020 was good to some investors. Stocks gained, with the S&P 500 ahead about 13%, while the NASDAQ Composite is up some 17%.

Precious metals investors fared even better. Gold has gained around 23%. Yet silver outshone all of these with an outstanding 44%. But as I’ll explain, I think gold’s cheaper cousin is set for another year of outsized gains.

I believe we’re entering a perfect storm for silver. Not only are central bank balance sheets exploding, but major economies are passing stimulus bills that, just a few years ago, would have been near-scandalous. What’s more, they’re doing so not just with relative ease, but outright encouragement.

The Fed’s balance sheet was $4.2 trillion at the start of the year. Today, it’s $7.3 trillion and growing. This year the U.S. Federal deficit will be triple that of 2019.

Federal Budget Deficits.
Federal Budget Deficits.

And yet, almost no one seems to care.  Until … inflation.

I think inflation will be the dark horse of 2021. As vaccination rates climb and the visible effects of the pandemic subside, I expect our wild rates of money printing will start to take effect. Currencies, in particular the U.S. dollar, are likely to weaken.

That’s what gold and silver have been sensing, especially since massive stimulus programs and a Fed promise of near-zero rates until at least 2023 appeared.  

Not only is silver demonstrating its ability to hedge against expected inflation, it’s also flexing its industrial-metal muscle. Fifty percent of silver is consumed in industry, plus 10% goes into solar technologies. Factor in exploding investment demand, and the metal’s outlook is robust.

What’s more, silver’s technical picture is providing a terrific setup.

Silver’s Bullish Technical Setup

The gold-silver ratio is a useful gauge to assess silver’s relative value against gold.

In March, the ratio spiked over 125, meaning it took an astounding 125 ounces of silver to buy one of gold. That’s an historic high which quickly reverted. 

20-Year Gold-Silver Ratio Chart.
20-Year Gold-Silver Ratio Chart.

For most of the last 20 years, this ratio has bounced around between 50 and 70. Typically, when the ratio runs up above 80 and reverses, it tends to run down to 50 or even lower. Currently, the gold-silver ratio is near 73, and has been trending down. That’s what it does during precious metals bull markets. I think it has further to fall, even if gold moves higher, which is likely. As a result, I expect silver’s gains will easily outpace gold’s in 2021.

What’s more, the silver chart is confirming bullish price action.

Silver Futures.
Silver Futures.

Layer on top of that the seasonal trend for silver, and it becomes difficult to paint a more favorable outlook.

Silver Trends.
Silver Trends.

As you can see, silver tends to perform particularly well from December through February.

So here’s how I see it.

Ignore the daily noise in silver prices. One day traders buy the rumor, the next they sell the news. Instead, we need to focus on the bigger trend: silver has already more than doubled since March. It’s in a bull market.

Most of us are anxious to welcome 2021. And those who invest in silver and silver stocks are likely to find next year particularly rewarding.

It’s time to buy silver.

Buy Silver Now!
 

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Buy Silver Now!

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Comments (6)
Sadanand Kabbe
Sadanand Kabbe Jan 11, 2021 11:48PM ET
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gold will test $1450 in 2021
Alan West
Alan West Dec 24, 2020 4:35PM ET
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Gold and silver have both topped out, and historically, once that happens, the party’s over. For years.
pravin nerkar
pravin nerkar Dec 24, 2020 6:55AM ET
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wait ,Watch buy Silver @ it's demand Zone support $22 to $20 Ounce comming next few days 🇮🇳🇦🇺🚩Jai Ho🚩
Robin Katari
Robin Katari Dec 23, 2020 8:58PM ET
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Buy Silver only  @21.890 coming soon
Andrew Allen
Andrew Allen Dec 23, 2020 2:15PM ET
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"once a century" hahahaha tell me Peter Krauth by what metric is this new virus a once in a century event? measured by deaths? Total annual death toll is similar to years past, unlike the Spanish flu which decimated poulations. You are peddling fiction Peter
blue sky
blue sky Dec 23, 2020 10:13AM ET
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damn it..it said buy now. I'm losing profit
 
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