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If You Haven't Bought Silver Yet, Read This

By Chris Weber, editor, The Weber Global Opportunities Report
Wednesday, November 3, 2010

The last time I was able to identify a period when a precious metals correction was about over happened two years ago...
At that time, gold hit a low of $693 and silver $9.63. Since then, gold has risen over 40%, but silver has soared 158%. This is an extraordinary occurrence in just two years.
Two weeks ago, I thought both metals, and especially silver, were due for a rest, and perhaps a correction.
Silver reached $24.75 on October 14. I expected a back-off to begin. But so far, we've had very little. Silver briefly touched as low as $23. That is a 7% fall. In the universe of silver, this is nothing. And then the rise resumed. As I wrote this, silver reached a new high of $24.91, surpassing October 14's $24.75.
This all feels unprecedented to me. Gold has not been giving people an advantageous entry point for a long time now. But silver is supposed to crash at certain times... It can almost be relied upon to do this.
Not this time. At least, not so far. Given an opportunity to correct or even consolidate its prior gains, silver barely takes a breath and then reaches new highs.
Why? Some say silver shorts are covering. But why now? Why this time? Silver prices refused to fall, and then rose... Of course under these circumstances shorts will cover.
No answer I've heard is satisfying. I just take the price action as the news. And the news is that this is bullish behavior the likes of which I don't think I even saw back in the last bull market of the 1970s.
Of course, over the life of that bull market, silver soared from $1.29 to $48: a rise of 3,600%. So far this time, silver has only risen from $4.03 to $24.91. That's "just" 518% during a similar time period.
But the feeling this time is different. Silver has only had one typical correction: from $23 to just under $10. But while the percentage correction was typical (over 50%), it was all over in just seven months. A huge and powerful bull then quickly returned silver to new highs.
And so far, this time, when I expected a real rest, silver isn't having it at all.
It is possible that average investors now think that gold is too expensive for them and see silver as something they should have. For a few hundred dollars or the equivalent in other currencies, silver is regarded as within the budgets of all investors, be they from India or Indiana, from China or Chinon.
Can you imagine what would happen if every investor on earth became convinced that they needed to own some silver? My old forecast of $187 per ounce may start to not look so wild.
One other thing has happened recently that I haven't seen mentioned. Silver has now clearly overtaken gold as the best-performing asset class since 2000. Gold has risen from $256 to $1,365. That is a rise of 433%. Silver has risen from $4.02 to $24.91. That is a rise of 520%.
As important, those advising silver accumulation have been few in number, and remain so.
For those who have been waiting to buy or add to their silver holdings, there is no guarantee we'll have any big correction, or even a consolidation. I'm forced to advise people to simply buy or add without trying to time their purchases.
In general, this is what you should do in a bull market, but I had until now thought I was clever enough to attempt to time purchases a little. I no longer consider myself so clever. So my advice is to bite the bullet and accumulate at least some physical silver.
Good investing,
Chris Weber

Further Reading:

As commodities continue to boom, silver's cousin gold is touching an all-time high. But Tom Dyson has one idea how you can still get your hands on gold at a discount. Tom calls it "the only gold investment I know of that's suitable for new buying right now." Find it here: The Only Cheap Gold Investment Left.
Casey Research recently put together a quick-glance guide to buying silver. "The risk of buying silver at current prices is lower than owning none at all," they write. Read it here: The 2010 Silver Buying Guide.

Market Notes


Collecting silver royalties is a great business... just ask shareholders of Silver Wheaton.
As we highlighted in this 2009 column, Silver Wheaton isn't your average mining stock. It doesn't operate mines or explore for mineral deposits. It finances lots of early-stage silver projects and collects royalties when those projects start producing silver. This makes the company a diversified, leveraged way to profit from rising silver prices.
For much of the past two years, our colleague Matt Badiali has been telling anyone who would listen about the merits of owning shares of Silver Wheaton. And Matt's readers are profiting right now.
SLW has nearly quadrupled since Matt's recommendation. And just yesterday, shares broke out to a new all-time high. We've been urging readers to focus on precious metals and the stocks involved with them for a long time. The two-year chart of Silver Wheaton below shows you why...

As predicted, Silver Wheaton is skyrocketing

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