Have You Missed the Boat in Gold and Silver?

The Dow is down over 500 points today. Coupled with the recent gains in gold and silver, I have been fielding several phone calls from advisors asking the same question: “Have I missed the boat on gold and silver?”

All of these advisors have clients who have been waiting, analyzing and watching the gold and silver markets the last several years without ever purchasing. Now that we have seen gold and silver outperform all major equities over the last 12 months, clients and advisors alike are wondering if it’s too late to “get in the game.”

My answer for each call is a resounding “No!” after which I explain some key factors transpiring in our national and global economy.

On August 14 the 10-year and 2-year Treasury yields inverted. This means that, if you’re an investor, you are being paid more to invest in a 2-year bond than the 10-year bond. That seems fairly ridiculous, does it not? Since 1950, every time this has happened (except once) it signaled a recession. The last time this happened was 2007, which, of course, was followed by the Great Recession of 2008.

Before we officially entered the Great Recession of 2008, silver was trading at $9.73 per oz. In three short years, after our equity markets dropped 50%, silver traded at a high of $49.82 – nearly a 500% gain. For the last several years, I have been educating our advisors and clients on how gold and silver play an inverse relationship to the equity markets. This pending recession should prove to be the same.

So, did you miss the boat? No. Though we have seen great performance from precious metal already, history tells us that now is still a great – if not crucial – time to purchase.

With the silver spot price currently hovering above $17 per oz., we could see silver well over $100 per oz. within the next few years just calculating the same percentage returns from our last recession. I believe this pending recession is set to be much worse than we saw in 2008, which could mean greater returns on precious metal, but that is a different topic for a different day.

The yellow metal is expected to continue to rise, too. On August 13 CNBC reportedthat gold could hit $2,000 in the coming year, quoting Daniel Ghali, commodities strategist at TD Securities, who also said, “I would argue we are likely on the cusp of a multi-year bull market for gold.”

Clearly, the boat has not even been untied from the dock, but it may happen soon. The next year or two could be a wild yet exciting ride for both gold and silver. Do you want to be watching from the shoreline? Once the boat does leave, it will not be coming back.