We haven’t looked at silver in a while, so let’s check out the latest ad pitch for Jim Fink’s Velocity Trader — he’s talking up a silver trade that he says you can make for $1 and generate 400%+ returns.
This is the intro:
“I’ve found a way for you to make an absolute fortune in the silver market.
“It’s a simple $1 trade that could help you make 5x your money.
“In the next 90 days.
“A collision of political and economic forces has set off a chain reaction that will cause the price of silver to skyrocket.
“It’s already surged 15% in the past few weeks.
“And as you’ll see in just a moment, the run is just getting started.”
You can always come up with someone who has an optimistic forecast for anything, of course, so Fink makes sure to quote a couple of them — HSBC is expecting a 40% increase in the price of silver this year, and “one mining executive” expects silver to “catapult to $140 an ounce.”
Personally, I own a bit of physical silver and expect its value to keep up with inflation over the long term… but I have no idea where the price will go over the next 6-12 months. Silver is often referred to as the “poor man’s gold” because it also has a long history of use as money, including being part of our circulating currency as recently as the mid-1960s… but it’s much cheaper per ounce, and the price has also been far more volatile (partly because it’s just cheaper, partly because it has had periods of heavy industrial as well as “precious metals” use).
Fink also indicates that you could place this same trade several times a year, and keep profiting if silver keeps rising, so that indicates he’s very likely talking about options trading (or some other time-specific derivatives). What else do we learn about this “$1 Silver Trade?”
Well, first there’s Fink’s bullish prognosis for silver, so we know where he’s coming from — he argues that silver demand is increasing at the same time that demand is falling:
“Global silver supplies have plummeted by a staggering 12.64 million ounces.
“And according to The Silver Institute, a nonprofit association made up of industry insiders, it sparked a massive shortfall….
“But what really triggered the countless hours of due diligence I’ve done on this situation was this quote I found in a recent Bloomberg article…
‘More good news for silver bulls: there’s supply trouble brewing. Output from mines will fall for the first time since 2011, while demand for the metal in uses including industrial products and jewelry is heading for a fourth straight gain, supporting prices, according to CPM Group.’
That wasn’t all that “recent” — the article he’s quoting is from last April, when silver and gold were both in the midst of their most fantastic six-month period in years — gold went up about 25% in the first half of 2016, as you may recall if you were enjoying some nicely leveraged returns in a gold mining stock or two at the time, and silver did what it often does, which is move along with gold but with more vigor, and rose by almost 50% at the peak. Something similar happened to star this year, with gold rising about 8% and silver climbing by 15% in the first two months of the year, but both have come sharply off of those highs in the past three weeks (with recent changes mostly driven by interest rate expectations, it appears).
And Fink indicates that this supply/demand imbalance is similar to early 2011, when silver last took a crazy run — and he compares his trade today to what was available back then:
“… during that same time, there was small $1 trade identical to the one I’d like to send you today that jumped an astounding 642%!
“And it didn’t require perfect timing.
“Because it churned out that massive winner on just 26% of the total price increase…in only 49 days.
“Once you discover how easy it is to make money with this simple trading strategy…you’ll want to do it over and over again.
“And the good news is, you’ll have plenty of opportunities!Are you getting our free Daily Update
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