Silver Loses 15% In One Day…Who Cares?

Silver just dropped from $29 to $24.40 in a single day. That’s more than 15%.

This is what happens with volatile assets. They can move dramatically. Get over it, and get used to it.

Does that mean you should avoid silver? No. It just means don’t buy more than you’re comfortable with for an asset that’s as explosive on the downside as it is on the upside.

Is silver’s bull market over? Not even close.

If you’re smart, you’ll instead make that volatility your friend. Didn’t Buffet say be greedy when others are fearful?

My point is, right now there’s fear in the silver market. So you should at least be interested. Soon, it will be time to get greedy.

A Little Silver Perspective

On February 21st, silver was $18.60.  Less than a month later, by March 16th it had dropped to $12, down by more than 33%.In late May it had regained $18, up by 50%.

Then after climbing to $29, and up another 55% by August 11th, silver just lost 15% in just one day.

And yet, for anyone long silver, there’s no need to worry. Silver will come roaring back. But more than likely, it’s not quite done correcting yet.

If we look at how silver compares to gold so far this year, the outperformance has been stunning.

(Click on image to enlarge)

Since the depths of mid-March, GLD is up about 35%. Meanwhile, SLV is up a spectacular 108%...even after its 15% drop!

The fact is, you should be excited; silver’s on sale!

In my silver update three weeks ago, Silver: 4-year Highs and More to Come, I made the case that silver was cheap relative to gold. At the time, silver was $21 and gold was $1,840.

I pointed to the gold to silver ratio which had, at the time, reverted from an all-time high of 124 to 1, to 87.4 to 1.I said, “And with the ratio still well above 80, odds are it has even further to run.” 

Here’s a current chart of the gold to silver ratio.  It’s now at 75.

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