While in the last century, one could fare pretty well with “set it and forget it,” meaning you bought a high-quality stock or an index and wake up 30 years later with compounded profits, today you need to be on your toes not to lose all your money. Current affairs in Silver are an excellent example that only the most flexible and informed investors will be able to preserve their wealth.
We took for many months the stands of a Permabull in Silver and still do. Our primary call for acquiring physical Silver might find some hurdles. You might not get any. When we started in March of last year at the price of US$12 to urge for acquiring physical Silver holdings, we already experienced the vast percentage difference between the spot price and the actual acquisition price of Silver. This phenomenon persists to the present day. And what to do if one can’t purchase real Silver anymore?
We look at the markets primarily from the perspective of risk. As long as you do not have too dramatic pullbacks (= a homogeneous equity curve), you can always recover from a temporary setback. After all, not every investment idea might work out.
Sil, Global Silver Miners ETF, Weekly Chart, ETFs might look good, but they aren’t:
If Silver’s physical acquisition should come to a halt, we find mining stock ownership to be an excellent second choice.
Here is why. Leveraged positions like ETFs (see above chart of Global X Silver Miners ETF (NYSE:SIL)), futures, and options allow special restrictions made by brokers and clearinghouses tied with their firms’ positions. Large players like this can also go belly up, especially in six sigma events. In that case, it is essential to find liquidity, the ability to transfer positions from one broker/clearinghouse to another, and mostly to liquidate positions. An option they may deny you through their regulative powers.
Monthly Chart of Silver, Think long term and win:
While Silver’s smaller time frames can be intimidating at times due to their volatility and recent limelight in the news, the larger monthly time frame clearly shows the health of the trend in motion and the long term opportunity.
With this bigger picture in place, mining stocks will follow the uptrend.
The profit maze of Silver:
While we hold physical Silver in the highest regard to risk-averse wealth preservation (next to Gold and Bitcoin), additional investments in mining stocks are prudent. As a stockholder, you are a part-owner of a company with the acquired rights by law. From all the choices out there to participate in the Silver boom, mining stocks seem to be the ones with the smallest risk potential.
With a goal of long term investing and wealth preservation, it is essential to look at investments from a risk perspective rather than leverage.
Besides, many mining stocks pay dividends. That additional income flow can be reinvested, and one participates in the 8th miracle of the world: “Compound interest.”