Silver bull Lior Gantz, editor of Wealth Research Group, discusses
why he places silver at the top of his natural resource rankings.
I’m a silver bull. It’s the one asset class that has gone from bad to worse to nonexistent for most investors, and this is why Wealth Research Group places it at the top of our natural resource rankings.
How did this precious metal bring so much desperation and frustration to investors?
Real assets (commodities) haven’t been this cheap in a century.
2008 changed the global landscape from Asian expansion to global economic crash mode.
It brought about experimental financial practices and the need to
create a “wealth effect,” which has probably skipped you if you’re not a
multimillionaire and is why you’re completely ready for a complete
makeover of the system we are ruled by.
This transition has not gone unnoticed by money-hungry, power-driven
politicians, which are capitalizing on the renewed rise of populism.
We are transitioning away from monetary policy (Fed intervention) to
fiscal policy (government intervention). Trump’s infrastructure plan,
his tax plan, and his defense plan are only the beginning.
Financial assets are rising into uncharted territories, while
disposable income is mostly declining. In other words, for eight
consecutive years, our financial system has transferred immense amounts
of paper wealth to the elite.
This has brought about the rise of cryptocurrencies, among other effects, and the disgust voters have for the establishment has been growing.
Since the economy was slow, materials and industrials were deemed
“dead assets,” and because of low interest rates, the financial sector
wasn’t attractive either.
Out of the last 6,162 trading days going back to the beginning of
1993, the NASDAQ has been more overvalued than today with a market
cap/GDP ratio exceeding its current level of 45.8% on a total of only
201 trading days, or 3.26% of the time.
The U.S. economy, by all measures, is currently operating at its full
potential growth rate. This slow-growing economy can’t move any
faster—debt is the overhanging cloud that prevents growth.
The U.S. economy always peaks as job growth reaches maximum employment, and then a recession follows.
This is the fate of the U.S. economy in the next few quarters as well.
What does this mean for silver, then?
As the U.S. enters a recession and interest rates are at prime levels
for precious metals to rise in price, investors will look for new
sources of growth, and like I said, nothing is as certain as
infrastructure programs, both in the U.S. and China.
Higher inflation rates, a weaker dollar, and cheap Chinese shares
have propelled silver from its lows in the early 2000s to close to $50
per ounce at its peak a number of years ago.
Even so, silver is cheaper than you think—in fact, it’s cheaper than almost anyone can imagine.
It’s the only commodity 66% cheaper than 37 years ago.
It has sucked the lifeblood out of even the most rigid bulls, but the
ones who have slowly accumulated and have created a cash hoard in order
to catch the move up once the U.S. equities market contracts will have a
story to tell their grandchildren.
Silver stocks
are considered the most volatile equities in the world, therefore
you’ve seen a move away from risk as the price of gold subsided, apart
from that 2016 epic, short-lived bump.
The trend is now reversing.
2016 marked the first year since 2012 where gold prices in all major currencies have risen.
As interest rates rise, investors no longer need to own an overweight
position in dividend stocks as a means of achieving yield, as inflation
is eroding those yields.
Instead, in times of inflation, the investment community flocks to
commodities, and value investors, especially those like Bank of America
Merrill Lynch Global Research’s chief investment strategist, Michael
Hartnett, see the move towards real assets as one of the major themes
for 2017–2018.
The index is down by 75% from the historical median, which translates to a 400% upside just to reach equilibrium, but the juniors will perform much better than that.
Here’s how you need to play this:
1. Now: With the GDXJ (VanEck Vectors Junior Gold Miners ETF)
rebalancing ending June 16 and the Fed’s next rate decision coming the
day before, creating a cash position is important right now.
A real breakout will happen with gold initially, and the price we’re looking for is $1,300.
2. $1,300 Per Ounce: This is an “all clear” signal. Do what you will,
but it basically means that sellers will be few and buyers will be
plentiful.
Wealth Research Group will be as aggressive as early 2016, as we know these rare moments are critical.
I urge you to prepare yourself in three ways:
1. Portfolio: Cash up.
2. Education: Study our Gold Playbook: Part 1 and Part 2.
3. Emotional Discipline: This is a time-sensitive market—you’ll want to be at your best.
Lior Gantz, an editor of Wealth Research Group,
has built and runs numerous successful businesses and has traveled to
over 30 countries in the past decade in pursuit of thrills and
opportunities, gaining valuable knowledge and experience. He is an
advocate of meticulous risk management, balanced asset allocation and
proper position sizing. As a deep-value investor, Gantz loves
researching businesses that are off the radar and completely unknown to
most financial publications.
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Rory Hall, Editor-in-Chief of The Daily Coin, has written over 700 articles and produced more than 200 videos about the precious metals market, economic and monetary policies as well as geopolitical events since 1987. His articles have been published by Zerohedge, SHTFPlan, Sprott Money, GoldSilver and Silver Doctors, SGTReport, just to name a few. Rory has contributed daily to SGTReport since 2012. He has interviewed experts such as Dr. Paul Craig Roberts, Dr. Marc Faber, Eric Sprott, Gerald Celente and Peter Schiff, to name but a few. Visit The Daily Coin website and The Daily Coin YouTube channels to enjoy original and some of the best economic, precious metals, geopolitical and preparedness news from around the world.
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The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.
