The silver miners’ stocks have surged higher since mid-March’s COVID-19 stock panic, clocking in some big and fast gains. Nevertheless, this long-struggling sector remains vexing. By mid-May as their latest earnings season was wrapping up, the silver stocks were lagging the gold stocks’ powerful upleg. And the silver miners’ Q1’20 operational and financial results were disappointing compared to the gold miners’.
We are now entering the final part of the endgame of the latest fiat experiment and the actions of the Fed and other Central Banks virtually guarantee that most currencies, including and especially the dollar, will end up totally worthless, just like in the Weimar Republic in Germany in 1923.
Having focused intently on the running open losses of the 8 big shorts (ex-JPM) for the past year, the latest price surge would seem to put the 8 big shorts in particular serious jeopardy. Simply put, the open losses ($7.8 billion, as of Friday, May 15) have never been larger, while the prospects for the big shorts buying back all or most of their short position at anywhere near breakeven have never been lower.
Over the last 50 years there have virtually been no significant Silver rallies during a period when the US Dollar index has been rising.
If you are betting on a massive Silver rally while US dollar strength continues, then you have a very low probability of success. Similarly, if you bet on a massive Silver rally while the US dollar continues a long decline, then you have a great chance of success.
Silver is powering higher in a new bull market after getting clobbered in March’s stock panic. Investors have been flocking back to silver in the aftermath of that ultra-rare extreme-fear event. That brutal selloff also utterly wiped out speculators’ upside bets in silver futures, giving them massive room to buy back in. After being pummeled to record-low levels relative to gold, an epic silver mean reversion higher is underway.
It hasn’t been fun for silver investors. Gold has moved higher in response to the crisis, but silver has been nothing but weak and vulnerable this year.
Is this silver’s destiny? Is this all that we can expect for the foreseeable future?
No. History says a big change in the silver price is coming. We’ll look at that, but first let’s examine why, at this point in the crisis, it’s been so lifeless…
Particularly at times like these, when we’re experiencing things few would have imagined, it’s important to reach out for that which gives long term perspective and grounding. These days, it’s easy to get wrapped up in the short term and lose track of the long term. It’s no different for gold and silver. And I freely admit this is one of those “do as I say, not as I do” things, as it’s hard for me not to focus on the here and now in matters related to gold and silver.
Monday’s spectacular and unprecedented collapse of oil prices is, rightly so, the subject of non-stop commentary. Already considered depressed on Friday’s close, at $18.27/bbl., the May NYMEX crude oil futures contract, at Monday’s official settlement price, had fallen to negative $37.63, down $55.90.
There are a few times in an investor’s life where, as Jim Rogers once put it, you see a pile of money sitting in a corner and you can go pick it up. In other words, an investment opportunity that’s not just obvious, but has a high reward-to-risk ratio.