Friends (and even one enemy) have been texting me about silver.
And based on the fact that we just hit $92/oz here in the U.S., and over $105 in Shanghai, it's not about to ease up.
"Is it too late to buy silver?"
"Should I sell?"
"Are miners a buy here?"
I imagine many of you are wondering the same things.
So today, let's cover these bases.
This is the toughest question.
Let's take a look at the 1-year silver chart.
What a doozy… Textbook parabolic move.
So lately, when people ask if it's too late to buy, my answer is probably (for the short-term). I realize that's not satisfying, but it's what I see.
Over the long term, you guys know there's no bigger silver bull than me. Silver is a unique metal, in that it is both industrial and monetary. And demand on both sides is absolutely booming.
But this move just seems like too much, too fast.
So it would be reckless to recommend readers/friends buy here. I suspect we'll get a better chance to buy silver sometime in the next 5 months.
UNLESS... it's for a trade, and you set a tight stop loss. Or if you're dollar-cost-averaging into a position. If you've been buying silver regularly and building a position, it's fine to continue buying. Your cost will average out. Just don't bet the house here.
Of course, I could be wrong and we go straight to $150. Silver's price premium in China has reached a whopping $13, and the metal just hit $105 there. We've entered the mania phase now. Either that, or the paper silver problem is even worse than we suspect.
I highlighted this "Shanghai premium" in the Paradigm App's Daily Feed, back on January 6th, when silver was trading around $79 in the U.S. and $87 in China:
(Side note – Download the Paradigm Press App Here – it's free. I use it every day, and post in the Daily Feed frequently, along with Jim Rickards, Sean Ring, and all our other editors.)
Could U.S. prices follow China to $100 and beyond? Sure, but a sizable correction seems inevitable. That's the tricky part about violent markets like silver.
To be clear, your humble editor is not selling anything. Miners or metal. I'm sticking to the plan and holding for the next 3-5 years.
But people still holding after such a move are likely getting an itchy trigger finger.
Whether it's time to sell depends on your unique situation. I went in-depth on this question last September in The 'When to Take Profits' Problem.
The key questions are:
What is your time horizon? How long do you plan to hold?Are there attractive alternatives? What will you buy instead?Are the gains long-term, or short-term? Tax efficiency matters.If you're struggling with this conundrum right now, I strongly recommend reading the piece linked above. Even though silver was trading around $46/oz back then, it holds up well.
By now you guys know my plan. Hold at least 3-5 years through the coming waves of money printing and inflation. Your situation and plan may differ.
Of course, you can always take some profits and hold the rest. That's a nice happy medium for some.
I think miners have more upside than the metal over the short run. As we explored in Silver Miners Are Printing Money, the cash flows these guys will soon report are absolutely gigantic.
Many miners were making around $6/oz margin back in early 2024, and if silver stays at current levels, they'll be making $70+ per ounce.
Just incredible leverage to the price of silver. Additionally, silver miners also mine a lot of gold. So that gives some cushion to the share price if silver has a mini-crash, since gold is far less volatile.
Over the past few weeks, silver miners have been lagging the underlying metal price. That tells me that many investors don't think current bullion prices are sustainable.
But if we stay above $70/oz for this quarter, silver miners are going to be absolutely printing money. And if we can stay around $90... You get the idea.
Strangely, I think miners are actually a safer and higher upside buy than bullion right now. Our favorite silver miner ETF is SILJ. That's an easy way to get diversified exposure to the sector.
With all that said, both silver and miners are up huge over the past year. So tread carefully. I don't want to see people get burnt if silver crashes 25% in a week, which could happen after a wild move like this.
Long-term, I'm more bullish than ever. But the current move does make me a little nervous.
We'll keep a close eye on silver, and let readers know when we see good buying opportunities.
The Daily Reckoning