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In this post I will summarise why I bought into silver and why there’s currently a golden opportunity for investors.

After the events of COVID-19 and the entire globe was pushed into lock down, it became clear that we were heading into not only a global pandemic, but a potential recession.

During a recession, as most of us already know, central banks print exuberant amounts of money and ultimately devalues their respective currency.

A common hedge against inflation is to purchase physical metals, however at the time I was looking for a hedge GOLD was also heavily overpriced, particularly against Silver.

This is what led me to conduct further research into Silver to understand WHY the price of silver had been so heavily suppressed since 2008 compared to GOLD which had so heavily rallied.

Why has Silvers price been suppressed since 2008?

Some people allude that silvers price has been suppressed because it is worthless. It is “the cheap mans GOLD”. However Silver has historically held a price ratio of 1oz of Gold buying 25-50 oz of Silver. When I bought Silver, the price ratio had blown to HISTORICAL HIGHS of 1:120!

From a technical analysis point of view this was enough for me to feel comfortable buying Silver now, then waiting for the ratio to come closer to its historical level of 1:50 or 1:80 even, at which point I would sell my Silver for Gold.

But the actual reason (based on my research) for the GOLD:SILVER ratio
Blowing out so heavily is due to JP Morgan Stock Piling And Shorting The Price Of Silver.

In the following video, there is a 15 minute run down of how JP Morgan has done this.

Summary Notes

Since around 2011, JP Morgan have been stockpiling Silver

They quickly accumulated around 150 Million ounces

In 2018 it is said that JP Morgan have around 53% of the total 261 million ounces of Silver held in vaults

But JP Morgan have not only been stockpiling Silver

They have also been SHORTING IT

There is a limit on the number of contracts you are allowed to short for Silver

But because JP Morgan hold so much of it, they have an exemption on how many contracts they can actually short

This allows them to move the market price for Silver substantially more than anyone else, and hence conduct price manipulation

The price of Silver has been shorted by JP Morgan from $42 USD an ounce all the way down to $13 USD an ounce

What happens next?

The risk to short Silver when it is so close to 0 is too large

And also the potential gain to make on the huge stock piles of Silver is so high

So I suspect JP Morgan will now remove their short pressure from the market and allow Silvers price to run

Outside of JP Morgan

We are also currently heading into a global environment which is facing negative REAL INTEREST RATES

This is (interest rates – inflation)

The down side to holding commodities is you don’t get dividend payments

However people would prefer no dividend payments over losing money due to negative real interest rates

Hence commodities are a great speculative investment during crisis

Summary of GOLD:SILVER investment

I entered into Silver back at around $15 USD an ounce

It is currently up around 25%

The GOLD:SILVER RATIO was around 115 when I entered, it is now at 93

I am going to wait for GOLD:SILVER to reach around 80, I will then move some of my Silver into GOLD

However I do think Silver could get to $30+ an OZ and I think it is heavily under valued

As per this chart:

So I will hold some silver and look to sell it into GOLD closer to 1:50 ratio

This part of my portfolio is my long term hold 10-20 play. I also am looking to dollar cost average into Silver when the ratio is 80+. I will be buying a certain amount of Silver at the end of every month.

Disclaimer: The above content is for educational purposes only and is NOT investment advice. All investments involve risk and therefore we recommend you do your own research.

Written By William Wright Via www.miningstore.com.au

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