Silver prices are up over 40 percent so far this year. It has been one of the year’s best performing commodities – doing even better than gold, which is up “only” 24 percent year to date.
But as we’ve written before, there is good reason to believe silver prices are headed even higher. Negative interest rates and global economic uncertainty continue to scare markets and investors. Precious metals are great portfolio “insurance” and they have a low correlation to shares.
(To find out how to make money from the coming bull market in silver, click here.)
When silver booms, it really booms
Silver’s most recent peak came in April 2011. From there it tumbled more than 70 percent to its most recent lows reached last December. But since then it has rallied nearly 50 percent.
Here’s why we bring that up… Research shows that after silver drops more than 40 percent, then rallies 25 percent off the bottom, its average bull market gain is 339 percent. So, based on silver’s price history, we’re due for a massive rally in silver prices.
And if you exclude the 1,206 percent gain in the ‘70s bull market, the “booms” have averaged 230 percent.
Silver is still about 60 percent below its last peak. So, there is a lot of room for silver prices to climb before they get back to where they were a few years ago.
Silver mining shares are Superman to silver’s Clark Kent
But if you really want to maximise your returns in the coming silver bull market look at silver mining shares. Their prices explode when silver prices boom.
That’s because running a mine costs the same – whether silver prices are high or low. With fixed costs and low silver prices, miners often barely break even. But when silver prices are higher, and the mining costs haven’t changed, it means bigger profits for the mining companies – and higher share prices.
For example, during the most recent silver bull market from late 2008 through 2011, silver prices rose over 400 percent. At the same time, the Solactive Global Silver Miners Index, which tracks a basket of silver mining companies, gained 595 percent – or 50 percent more.
And some individual silver miners had astronomical gains. From its low in late 2008, Great Panther Silver (New York Stock Exchange; ticker: GPL) rose over 2,800 percent. And First Majestic Silver (NYSE; ticker: AG) rose 3,500 percent.
History shows we’re likely to see more extraordinary gains ahead.
As we said, silver is up over 40 percent this year. GPL is up over 160 percent. AG is up an incredible 415 percent this year alone. But remember, the average gain in the price of silver after at least a 25 percent rise in silver, is 339 percent.
You may think you have missed the boat after the recent strength in the price of silver. But remember, silver is still 60 percent off its 2011 high.
We’re nowhere near the top in this current silver market. If silver passes its $50 peak (which might seem unlikely but is possible), some silver mining stocks may even see their prices worth 50 times more. And this isn’t just hype. These returns happened last time around for a number of silver mining shares. Catching the right silver mining stock on the way up can produce life-changing returns.
We’re potentially on the cusp of this happening once again. There may very well be a slight pullback in silver prices soon. But that will likely be a little speedbump as silver climbs higher.
You should have silver in your portfolio – not just for insurance, but to profit from the coming gains. And if you really want to supercharge your returns, silver mining stocks are the way to go.
The iShares Silver Trust (New York Stock Exchange; ticker: SLV) is the most actively traded silver ETF in the world. It tracks the price of silver bullion. On the Hong Kong exchange, the ETFS Physical Silver ETF (code: 3117) does the same thing.
But to find out even more ways to earn big profits by investing in silver, please click here.