My Silver Outlook for the Super Crash

As you know, I’m a big fan of precious metals. I’ve written before about how gold can help protect you from the coming Super Crash. I’ve explained what makes it the true “anti-fiat currency,” told you why it protects against both inflation and deflation, and given you a run-down on my favorite dealers and gold investment opportunities for 2016.

I haven’t written so much about silver.

The main reason for that is that silver really is “poor man’s gold.” The major difference is that gold is a currency while silver remains a metal.  Silver has a lot more industrial uses than gold, is also more volatile, more dependent on the state of the industrial economy (which isn’t very good right now), and very beaten down right now. (As I write this, Silver Trust iShares ETF [SLV] is trading below $14, well below its price in 2011 when it hit $48.70/oz.). The strong dollar, China’s implosion, and a variety of other factors have all hurt the price of silver.

Overall, gold is a much better long-term investment than silver because it’s a currency rather than a metal.

I still wouldn’t short silver right now. It is too beaten down.  In fact, I have a few specific long plays I’d recommend.

Expect A Silver “Bounce” After The Super Crash

While silver won’t protect you from the Super Crash in the same way that gold will, it does have unusual resiliency. It will drop lower with a crash, but it also displays great ability to bounce back after a crash.

Look at what happened after the big drop of 2008.  Silver bottomed at a record $8.88/oz, but investors who had the patience to hold on saw prices gradually rise again – peaking with a 132.9% gain in 2011 when it peaked at $48.70/oz .

(Chart via seekingalpha.com)

If you’re going to buy silver, it’s a good idea to take advantage of the lower prices, hold on for now, and wait for the inevitable rebound. It may take a while, but it will pay off in the end.

The Indispensable Metal: Industrial uses for silver

Electronics

Textiles

Chemical

Solar energy

Medical

After just the first two weeks of trading this year, the Dow Jones Industrial Average lost 1417 points, or 8%, to close below 16,000 at 15,988.08, while the S&P 500 fell 158 points, or 7.8%, to close under 1,900 at 1,880.33.This crash is coming faster than I expected.

Yesterday, the Dow closed down another 249 points at 15,766.74…coming within 400 points of the intraday August low. We are in a bear market. No question about it.

In my 2016 forecast, I wrote that I expected a year-end target of 1875-1900 for the S&P 500. This was a repeat of my 2015 forecast. Obviously I was too timid despite my serious concerns about the market.  Given the collapse in the first three weeks of trading, I’ve now revised that forecast to an even lower number: 1,650 to 1,750. This means at least another 10-15% of downside before the market stabilizes.  But we will have to revisit our targets again if the market reaches those levels.

Of course, that means silver will continue to go down for some time before the expected rebound. And you’ll be able to purchase more of it.

Elsewhere, I’ve recommended that my investors allocate 10-20% of their portfolios to gold, other precious metals, and tangible assets. That recommendation still stands.

If you’re interested in including silver in your portfolio, my suggestions are below. I don’t follow the individual companies as much – these are macro calls, so I generally stick with the ETFs and, as I said, prefer gold to silver over the long term.

3 Things You Need to Know about the Super Crash

  • There’s only one way this market can end – with a Super Crash. There are five “inevitabilities” leading to the Super Crash: far too much debt, far too little economic growth, overvalued markets disconnected from reality, ineffective monetary policy, and geopolitical instability. Exactly how and exactly when the Super Crash will happen remains uncertain. So does how far the markets will fall before hitting true bottom. But what’s certain is that this threatens to be an extinction-level event caused by $200 trillion in global debt that will inflict serious damage on portfolios and retirement accounts.
  • It’s already started to happen. Summer 2015 offered a preview of what is coming. Puerto Rico’s insolvency, Greece’s default and humiliation by Europe, China’s stock market collapse and desperate currency devaluation… these symptoms of a grossly over-indebted world finally rocked U.S. markets in late August, causing the biggest one-day drop on the Dow Jones Industrial Average in history. It may look like we’re handling this correction like it’s no big deal. But we’re not simply putting off the Super Crash; we’re actually making the ultimate crash worse by delaying the inevitable market adjustments that have to happen.
  • This is an opportunity, not the end of the world. The August market sell-off is a reality check that will reset markets and create some great investment opportunities. So is the Super Crash. If you take the right steps to prepare for it, you’ll do fine – and even make a lot of money. But if you do nothing, you will get run over by the freight train that is rumbling down the tracks.


Silver Long Plays:

  • iShares Silver Trust ETF (SLV)
  • Hecla Mining Co. (HL)
  • First Majestic Silver Corp. (AG)
  • Pan American Silver Corp. (PAAS)

In addition, Central Fund of Canada Ltd. (CEF) and Sprott Physical Gold Trust (PHYS), both of which I recommended in my year-end forecast, own silver as well as gold.

Sincerely,

Michael

40 Responses to “My Silver Outlook for the Super Crash”

  1. This is just such baaaaddd advice. It’s just irresponsible. People like you have been crowing about metals for moths, years even and they have just continued to crash. Even SLV is down 45% from where it was 6 months ago. The famed Sprott resource traders are deep in red ink. Just throwing out shiny stuff isn’t investment advice. Even now you’re pitching metals. After it all has crashed and you invest, then of course people make money. Ground 0 up generally does. But by then your advice was followed and most of us are broke as a result. Get real, man.

  2. What would suggest as far as a good ratio of how much Gold to Silver to hold in ones portfolio.
    If you wanted to have a 10% position in PM in your over-all portfolio, how much of that 10% should be gold vs. silver? Also, how much would you suggest in terms of having an actual physical holding of each of these metals?

  3. A better BUY idea is after a 8% to 10% rally, watch the pullback, if ok, then consider a long position, you need to have a sign of strength that the big boys are changing their behaviour before average Joe jumps in. An example is GOLD when it stared its rally in 2000, another the USDJPY when it started its rise in 2012. Miss the first 5% off the lows, ride the wave up and not down. Good site.

  4. If the price goes under $15 per share , What does that mean for the largest bank in europe? Just wait until the share holders use their hand held I- phone 6S to sell their share of apple under $92 per share and it will become clearer to joe six pack why he/she should own silver /gold to barter. 🙂

  5. When are advisors like yourself going to start dancing on the heads of CONGRESS and leaders of all private companies for this reason!! Legislation on frequent trading to make the practice expensive. All we hear are negative comments about the President and the FED and nothing about congress and management of large companies. Did you ever hear of fiscal policy!!!! Who is going to hire people? We know you don’t want federal, state and local public hiring. A GREAT TAX LAW would just about fix all problems. You have been wrong for a very long time on gold and silver. Congress could help you with a gold standard.

  6. To give advice on something you apparently don’t fully understand or have taken the time to understand.A recommendation of SLV is horrible.It is a pooled unallocated account.You may want to see the gold/silver ratio?You may want to see the amount of retail and wholesale dollars invested in physical gold and physical silver.It has been for the past few years it is at a one to one basis in TOTAL dollars terms.These pithy,half arsed writings on PM’s does the ignorant a disservice.Silver is a precious metal…SEE Jewelry and kitchen ware.See use as money for thousands of years.I must stop writing before I blow a bigger gasket.lol 🙂
    Terrible article,woefully under-researched and misinformed.

  7. What’s being neglected here is that last big low in gold and silver coincided with the TOP of the dot com bubble in stocks (year 2000). So they don’t have to wait for the stock bear to finish before moving upward. In fact, they react more to what’s happening in the credit markets. That’s why they had a downward correction in 2008. And they were ripe for a correction since they had made big gain in the previous 8 years.

    Right now the gold/silver ratio is around 78, which is very high. Every bull market has begun with that ratio being very high and then it swings to opposite extreme by the end. So silver should out gain gold on a percentage basis.

  8. I’ve read w/interest your take on gold & silver markets, along w/advice on sites to buy same; however, while I will agree w/your preference for 1 oz coins AS PART OF ONE’S HOLDINGS, if you actually plan an “Armageddon stash,” I suggest a combo of hi-value coins, along w/some junk silver and lower-value gold pieces. (It will be hard to get change for 1 oz of gold!) Further, the more pre-1933 &/or non-US coinage you have, the better your chances of avoiding a govt recall, as w/FDR. In this area I favor British Sovereigns, ~1/4 oz of gold/per coin. (I’ve used “Coin Trader,” Metarie, LA.)

    I also waited to hear your advice about locating your holdings, but I don’t think I’ve seen that. What do you think about Perth Gold Certs as a non-physical asset holding in a foreign locale?

  9. I think you sell silver short. Multitudes of people can’t afford to scoop up five ounces of gold when things are going bad but they can afford fifty or one hundred ounces of silver. Silver might well out perform gold. I try to keep a balance between silver and gold for the reason I mentioned and also when things go into the toilet I would rather try to purchase things I need with fractional silver then hoping to get change for gold.

  10. Buy silver junk and fine forget gold unless ur a millionaire and want to keep that lifestyle if you just want to live and feed ur family. Buy buy buy silver and dont stop until you have enouph to fill ur basement or garage.as silver is the money of the middle class 2000 yeats ago it shall be again.I promise…..if you can afford a little gold buy 1/10 no higher….im working my own words as we speak. I was disabled last july and wife has cancer and we have custody of our 13 year old granddaughter. …forget banks buy ur own or build it….never buy silver or gold on paper ever!!!!! NEVER BUY SILVER OR GOLD ON PAPER ITS A SCAM…only buy what you can physically see touch and hold…..GOD BLESS YOU ALL AND DONT WAIT START AS SOON AS YOU CAN IM IN IT WITH YOU…..

  11. I agree with specialk. Silver is going to be the best method to purchase critical items during the eventual crash. During major event such as a 1930 depression the silver to gold ratio has historically gone to 16 to 1. If a depression occurs, the silver will significantly outperform gold. Only time will tell but I continue to purchase as much silver as possible from 1 oz to fractional amounts. I do plan on adding gold also but not as much as silver. My first priority is to survive the coming collapse.

  12. Silver is a great investment, sliver is used in a lot of electronic devise’s. Especially Cell Phones. Although the amount of silver used in electronic devices is small, it is never reclaimed. I believe silver is a great investment and has much more realistic uses then Gold. If possible add both to you portfolio, but silver is a better investment, in my opinion.

  13. Theodore Butler…..silver guru of our time. Check him out if you want to know possibilities of silver. John Lisne….Investment rarities…Minneapolis, MN. Straightforward honest guy for silver info and purchases. Tell him I sent you.

  14. John Sullivan

    Silver is my game. Certainly is the wise man’s choice. You can hold it…use for purchases…and you can sell it. And when you buy it at the right time, you can make a profit when you sell. Be patient and wait for the moment. You have to show discipline and a fair amount of patience. Others can do it … then why not you?

  15. Since January, everyone here (well not everyone) is talking about 1550 and 1650 S&P 500. It’s 2030. Thanks for the warning and the of 25-30% loss of opportunity. Don’t fight the fed. Just listen to the late Marty Zweig. Market is going up until it doesn’t. It’s not crashing all in one day so why cash out or short now? I can wait while making money in the market. Timing is a fools game. It’s been proven over and over and over and over.

  16. I CANNOT HELP BUT THINK THAT SILVER REPRESENTS A GOOD INVESTMENT WHEN IT IS 76 TO 1 COMPARED TO GOLD AND THAT IT IS A LOUSY INVESTMENT AT 16 TO 1 DOH! BUY THE STUFF AND STASH IT NOW AND WAIT USE WHAT YOU MUST WHEN YOU NEED IT TO STAY ALIVE (THAT WILL ALMOST SURELY BE AFTER THE RATIO COMES DOWN OFF 76 TO 1 AND YOU HAVE REALIZED A HUGE GAIN) THEN WHEN THE PRESSURE HAS EASED UP AND YOU ARE NO LONGER ABOUT TO GO HUNGRY, YOU SELL WHAT IS LEFT AND START THE ACCUMULATION PROCESS OVER AGAIN BUYING ON THE DIPS

  17. From early 1800’s there’s a steady increase of things the bible has predicted; now we have “distress of nations” at the same time that war is being waged against scripture and the ten commandments. I say buy some silver, gold, and usable assets before our currency collapse accelerates, but take a serious look at biblical prophecies. Look at the statue in Daniel 2(a progression of empires down to where the rock strikes the statue at the end of the Roman empire, and Christianity(and our calendar) begin. Look at Psalm 22(written 1000 yrs. before the crucifixion); how could the writer(King David) possibly know the Roman soldiers would gamble for Jesus’ garment? I’m not sure what those little tidbits of proof are called, but there are many of them scattered from Genesis thru Revelation. I’m sure I haven’t seen all of them, but I’ve seen enough of them to tell you the story of Jesus is true, I hope you all will closely examine the scriptures. I should add that you can’t make the bible agree with is generally accepted.

  18. I purchased 2500 ounces in October 2011 at an average price of $28.00. I got 1000 maples and 1500 x’s 100 oz. bars. After holding for 5 years and Gold gets all the praise what is the very best advice you could offer. I have no more cash, in fact living very humbly. This is a space in life I would not want to repeat, however, the confusion between Gurus’ in just one day is enough to make a person sick and I have heard so many comments which differ in surmountable ways I believe the whole dam bunch of you guys get together and attempt, just once, to agree on something. I’m 73 years old, this silver has
    has not made one dime and its’ really hard to listen to the terrible differences 10 gurus could come up with and I was like a blind sheep that just walked in and done it. $80,000, my life savings and to you guys its’ just another day of, WHO KNOWS.

  19. After the crash of the dollar how do I convert my Gold and Silver into currency? If the dollar is worthless what have I accomplished and Inflation or Deflation has happened. Maybe you could write an article about what to do after the crash then post it on your web site.

  20. I’ve been listening/reading about the inevitable rise in gold (and silver) prices for years. Sure, at some point in the future, prices may rise. But, who knows when. or why, since this market is totally manipulated. That’s problem #1.

    But, I doubt the government will let those that have purchased the coins reap the rewards. Confiscation occurred before in the US. That’s problem #2.

    The biggest issue is that there is not nearly enough physical gold/silver available for the uber wealthy to use it as a way to store/protect their wealth. They will therefore prevent it from being a way for anyone else to protect their wealth (I.e. come out ahead).

    The system is totally rigged. Listening to truth-tellers or liars produces the same outcome. You must be or know a successful manipulator to rationally make money these days in the market. Or just be lucky.

  21. don digennaro

    do not bet the farm on gold or silver.Buy what you can afford not to make you rich. You buy 10 to
    20 % of your total net worth. Consider it a insurance policy if things get crazy. Also in the initial collapse having some cash would be helpful. do not forget if cash is lost on because institutions go bankrupt cash will be king for a while.

  22. I only own gold stocks headquartered in Canada in 1929 homestake mining was 89 dollars a share. By 1935 it was selling for 489 dollars per share. During that time it paid 158 dollars a share in common share. Divends. One year alone it paid 58 dollars per share dividend. Also if the Canadian dollar doEs. Not drop off as much as the American dollar in the crash. I will request stock certificates on my gold stocks from ameritrade and go to Canada to redeem them. If I can get more money in Canadian dollars.per the exchange rate. Then I will wire the money back to my bank in America or send the check back to me in america.at least you have 2 options. This is a smart way to protect yourself I think. Good luck to all.from

  23. Buy gold, buy silver.Depending on your age you should have started buying back in 1960, 61. You could have bought and sold a minimum of 5 times. You didn’t buy at the bottom (you dollar averaged), you didn’t sell at the top, but you still made a bundle. You might have waited and reinvested all of it, part of it or did as I did, took out my start-up and reinvested the rest. I’m now sitting on a very nice pile of silver and gold with no cost out of my pocket and yes over the years I sold some for a new furnace, air and a new well. I’ve also made sure that I have some junk silver. When the dollar is no longer and I need to buy something I’ll have some silver dimes, quarters and halves to barter with. Try going into a store with an oz. of gold or silver and after you barter for your items, ask for change, your groceries just when up in price because they don’t have any change. U.S. dimes are 1/10 of an oz.(new), quarters are 1/4 of an oz. (new) and halves are 1/2 an oz (new). Silver dollars are a diffe rent story, they are worth more no matter the condition so sell at a coin shop or to a collector. With this junk silver you’ll be able to pay bills , eat, buy gas, etc.without being screwed because you can’t come close to the cost of your purchase. Good luck to all with this coming crash and the length (in years), thanks to the Fed in the U.S..

  24. My preference is silver. The main reason is that the gold/silver ratio is SO out of whack that it offers the greatest potential for total gain over the long haul. At this time I have several hundred ounces of silver (Mapleleafs) and my favorite silver stock silver wheaton (slw).

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