Why Singapore investors need to watch the silver market

With uncertainties like Brexit and the world’s growing debt load battering financial markets, investors need to own assets with real value… like gold. We’ve mentioned in past articles gold is great portfolio insurance when stock markets collapse. And many Singaporeans love to own gold.

But there’s another precious metal you should include in your portfolio that’s outperforming even gold – silver. Silver prices are up 49% year to date – 22 percentage points higher than gold’s 27% gain.

And here’s why.

(For the complete story on silver and silver mining shares, download our free silver special report here.)

Silver soars during uncertainty
As the financial world continues to plunge into negative interest rates, investors are flocking to gold and silver.

Gold and silver tend to move up and down together – they’re almost perfectly correlated, with a correlation of 0.89 (1 is perfectly correlated). This is why you see both typically rise during times of financial uncertainty.

That’s because when investors fear the future, gold and silver prices trade as money rather than commodities.

Silver is already up 49% in 2016. Money managers have increased their net-long positions to all-time highs. Silver holdings in exchange-traded funds have reached 19,904 metric tons –  within 2% of the all-time record set in October 2014.

Remember, this is what the smart money has been doing… When the smart money – that is professional, institutional investors – begins betting heavily in a specific direction, you need to sit up and take notice.

But history shows us that silver prices are just getting started.

Research shows that after silver drops more than 40%, then rallies 25% off the bottom, its average bull market gain is 339%.

If you don’t count the 1,206% gain in the 1970s bull market, silver’s “booms” have still averaged 230%.

This chart alone shows how incredible a silver bull market can be if you’re able to catch one on the way up.

So, what’s the situation today? Silver prices collapsed 72% from their peak in 2011 to the lows reached last December. And now they have climbed 50%. As noted, whenever something similar has happened before, silver prices skyrocket.

It’s important to note, though, that silver’s price action is much more volatile than gold’s.

For instance, gold prices fell 45% from their peak in 2011 to their bottom in December 2015. But, as mentioned, silver collapsed 72% from its most recent top to bottom.

But silver soars more than gold in bull markets. From 2000-2011, gold rose 550%. Silver went up more than 800%. That’s 250 percentage points more than gold.

In fact, silver has outperformed gold in every bull market over the past 40 years.

Silver stocks soar even higher
When silver booms, silver stocks explode higher and produce even more dramatic results.

The last bull market in silver was between 2008 and 2011 when silver rose more than 400%.

During the same period, silver miner Great Panther Silver (NYSE: GPL) rose over 2,800%. And First Majestic Silver (NYSE: AG) rose 3,500%.

At the same time, the Solactive Global Silver Miners Index, which tracks a basket of silver mining companies, gained 595%.

The future of silver prices
History shows we’re bound to see more extraordinary gains ahead.

Silver is up 49% this year. Remember, the average gain after at least a 25% rise in silver prices is 339%.

You may think you have missed the boat. But remember, silver is still 60% off its 2011 high.

We’re nowhere near the top in this current silver market. If silver passes its $50 peak, which is entirely possible, some silver stocks may even see their prices worth 50 times more. This may sound hard to believe, but as we just explained it’s happened before.

The easiest way to invest in silver is through an exchange-traded fund (ETF). Unfortunately, there is no silver ETF that trades on the Singapore exchange. So you’ll need to look at the New York Stock Exchange or the Hong Kong Exchange for a silver ETF to buy.

The most popular ETF is the iShares Silver Trust (ticker: SLV), which trades on the New York Stock Exchange. It tracks the price performance of the underlying holdings in the London Silver Fix Price. So it provides exposure to the day-to-day movement of the price of silver bullion. In Hong Kong, you can use the ETFS Physical Silver ETF (code: 3117) which does something similar.

You may download our free special report to learn all you need to know about why and how to buy silver. Click here to download. 

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