Is A REAL Breakout in Silver Prices FINALLY At Hand?

Submitted by Streetwise:

Silver bull Lior Gantz, editor of Wealth Research Group, discusses why he places silver at the top of his natural resource rankings.

NASDAQ Market Cap/US GDP Ratio

I’m a silver bull. It’s the one asset class that has gone from bad to worse to nonexistent for most investors, and this is why Wealth Research Group places it at the top of our natural resource rankings.

How did this precious metal bring so much desperation and frustration to investors?

Real Assets at All-Time Lows

Real assets (commodities) haven’t been this cheap in a century.

2008 changed the global landscape from Asian expansion to global economic crash mode.

It brought about experimental financial practices and the need to create a “wealth effect,” which has probably skipped you if you’re not a multimillionaire and is why you’re completely ready for a complete makeover of the system we are ruled by.

This transition has not gone unnoticed by money-hungry, power-driven politicians, which are capitalizing on the renewed rise of populism.

We are transitioning away from monetary policy (Fed intervention) to fiscal policy (government intervention). Trump’s infrastructure plan, his tax plan, and his defense plan are only the beginning.

Financial assets are rising into uncharted territories, while disposable income is mostly declining. In other words, for eight consecutive years, our financial system has transferred immense amounts of paper wealth to the elite.

This has brought about the rise of cryptocurrencies, among other effects, and the disgust voters have for the establishment has been growing.

Since the economy was slow, materials and industrials were deemed “dead assets,” and because of low interest rates, the financial sector wasn’t attractive either.

Out of the last 6,162 trading days going back to the beginning of 1993, the NASDAQ has been more overvalued than today with a market cap/GDP ratio exceeding its current level of 45.8% on a total of only 201 trading days, or 3.26% of the time.

NASDAQ Market Cap/US GDP Ratio

The U.S. economy, by all measures, is currently operating at its full potential growth rate. This slow-growing economy can’t move any faster—debt is the overhanging cloud that prevents growth.

The U.S. economy always peaks as job growth reaches maximum employment, and then a recession follows.

This is the fate of the U.S. economy in the next few quarters as well.

U.S. Unemployment Rate

What does this mean for silver, then?

As the U.S. enters a recession and interest rates are at prime levels for precious metals to rise in price, investors will look for new sources of growth, and like I said, nothing is as certain as infrastructure programs, both in the U.S. and China.

Higher inflation rates, a weaker dollar, and cheap Chinese shares have propelled silver from its lows in the early 2000s to close to $50 per ounce at its peak a number of years ago.

XAU/S&P 500 Ratio

Even so, silver is cheaper than you think—in fact, it’s cheaper than almost anyone can imagine.

It’s the only commodity 66% cheaper than 37 years ago.

It has sucked the lifeblood out of even the most rigid bulls, but the ones who have slowly accumulated and have created a cash hoard in order to catch the move up once the U.S. equities market contracts will have a story to tell their grandchildren.

Silver stocks are considered the most volatile equities in the world, therefore you’ve seen a move away from risk as the price of gold subsided, apart from that 2016 epic, short-lived bump.

The trend is now reversing.

2016 marked the first year since 2012 where gold prices in all major currencies have risen.

As interest rates rise, investors no longer need to own an overweight position in dividend stocks as a means of achieving yield, as inflation is eroding those yields.

Instead, in times of inflation, the investment community flocks to commodities, and value investors, especially those like Bank of America Merrill Lynch Global Research’s chief investment strategist, Michael Hartnett, see the move towards real assets as one of the major themes for 2017–2018.

GSCI/S&P 500 Ratio

The index is down by 75% from the historical median, which translates to a 400% upside just to reach equilibrium, but the juniors will perform much better than that.

Here’s how you need to play this:

1. Now: With the GDXJ (VanEck Vectors Junior Gold Miners ETF) rebalancing ending June 16 and the Fed’s next rate decision coming the day before, creating a cash position is important right now.

A real breakout will happen with gold initially, and the price we’re looking for is $1,300.

2. $1,300 Per Ounce: This is an “all clear” signal. Do what you will, but it basically means that sellers will be few and buyers will be plentiful.

Wealth Research Group will be as aggressive as early 2016, as we know these rare moments are critical.

I urge you to prepare yourself in three ways:

1. Portfolio: Cash up.

2. Education: Study our Gold Playbook: Part 1 and Part 2.

3. Emotional Discipline: This is a time-sensitive market—you’ll want to be at your best.

Lior Gantz, an editor of Wealth Research Group, has built and runs numerous successful businesses and has traveled to over 30 countries in the past decade in pursuit of thrills and opportunities, gaining valuable knowledge and experience. He is an advocate of meticulous risk management, balanced asset allocation and proper position sizing. As a deep-value investor, Gantz loves researching businesses that are off the radar and completely unknown to most financial publications.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

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  1. Breakdown is a better bet!  These articles need to have a disclaimer that they are only to be read for comedy!

    I see Goldman and the other Jewish banking cartel has done it again.  Keep stacking when you are 85 there is a remote chase you will win with these losing investments!

  2. Cognitive dissonance theory suggests that we have an inner drive to hold all our attitudes and beliefs in harmony and avoid disharmony.  This produces a feeling of discomfort leading to an alteration in one of the attitudes, beliefs or behaviors to reduce the discomfort and restore balance etc.

    For example, when people stack (behavior) and they know that stacking causes loss of wealth (cognition).  The desire of stackers to maintain cognitive consistency can give rise to irrational and sometimes maladaptive behavior.

    Dissonance can be reduced in one of three ways: First, individuals can change one or more of the attitudes, behavior, beliefs etc..   A second (cognitive) method of reducing dissonance is to acquire new information that outweighs the dissonant beliefs.  For example:  stackers may point to a spike in price to reduce the dissonance.  A third way to reduce dissonance is to reduce the importance of the cognitions (i.e. beliefs, attitudes).  The stacker could convince themselves that possessing precious metals while simultaneously loosing wealth is better than denying themselves the pleasure of stacking.

  3. Now where have I heard this before? Oh yeah, for the last 5 years! I’m going into bitcoin where the bankers can’t rig it.

    That said, the metals will start moving up again after Wednesday when the fed BS bank meets.


  4. Are you out of your mind?  Maybe a breakout to $17 after falling to $16.  Central Banks have destroyed the Precious Metal trade through manipulation and price suppression.  All the CB boys should pat themselves on the back and give the Banksters a big raise funded via tax payer bailouts.  Distortion has run to all time highs.


  5. You do have to give these losers who write this trash credit for having the guts to put it in print. I think instead of using charts to justify their conclusions, they should use tarot cards or a ouija board for more accurate projections. My question is: Why does this site continue to publish this garbage? The market is RIGGED! Get over it!

    • They could always fall back to a more ancient standard and read their financial future via interpreting chicken innards.  The benefit there is that the “analyst” can then have a nice chicken dinner after doing his interpretive “work”.

      Yes, the market is rigged.  So what?  The trick here is not to complain about this fact interminably but to recognize it AND then make money anyway.  That’s how one tells the banksters to eff off.  Living well, in spite of their efforts, really is the best revenge.  😀


  6. Looks like TPTB ALSO know that 1300 is a key number, hence the monkey hammer the last couple of days to drive it back down to the 1265 area. Like I said in a response to an Organ grinder article – I’LL START GETTING EXCITED WHEN GOLD BREAKS 1350! Because it seems everyone in the investment world loves ‘charts’, and they will now be interested with a break to 1350….

  7. The following excerpt is from a Bullionstar article in Zero Hedge.  

    Those looking for a return on their money in currency terms perceive gold as an investment which they can sell at a currency price higher than what they bought it for.  
    We would however argue that the idea of trading your fiat paper currency for gold today, hoping to trade the gold for even more fiat currency in the future, defeats the purpose of owning gold in the first place.  
    Saving in gold is an insurance against the failure of fiat currency, not a means of accumulating more of it.  
    The healthiest and most natural way of looking at gold is to view gold as savings or as a form of wealth preservation.   

  8. When the daughter banks can’t make money, the Fed will step in.

    Only China/Russia/Middle East can affect the price of Gold/Silver.

    When they are tired of being manipulated, the Dollar will go.  Now, we pay countries to use Dollar. Trump, by his better deals for the US, will stop the payments. This will have grave effects.

    • Good.  What we are doing now is pretty much sucking, big-time.  Doing more of it will not improve the situation.

      As to the Chinese, at some point they will teach the West a lesson that has been forgotten.  That lesson is that ‘He who has a thing, gets to set the price of that thing’. Once they reveal the true size of their gold hoard, there will be no question about who sets the price of it… and it won’t be the paper mongers.

  9. Late Breaking News! I just returned from the Star Wars bar. I didn’t see Rickard Pryor, but I did get to talk with the local Unicorn. He assured me that silver will be $199.68 on or before July 4th. The Unicorn got this tip from Henny Penny, who said the sky is not falling after-all.

  10. I can set my watch with the 100% predictable drive by schwacking that AG and AU get every morning.  Keep schwacking?   Keep Stacking?   Dunno about that

    I got my stack. Everything else is BS

    FRN IOUs can F.O.

    We got peak political ineptitude in the blue states

    Peak BS in all 50 states

    Peak debt in every corner of the world

    Peak Pension failures that will cost $400 trillion in the next 30 years

    EROI of all of this?  3 orders of magnitude negative.

    Give me some shiny or give me debt.  I’ll take some gold please

    • They would be nowhere because most things are defined by their inverses.  There can be no light without dark, no wet without dry, no hot without cold, and no winners without losers.  😉


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