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Why I'll Buy Silver Soon

By Brett Eversole, analyst, True Wealth Systems
Monday, April 22, 2013

In just the past month, silver is down 20%... and it's the worst-performing commodity of 2013.
 
This is a big reason why you need to be ready to buy silver, very soon...
 
I know... after last week's historic selloff (the worst in 30 years), you probably don't want to hear about gold or silver. But as I'll show you today, based on history, buying silver in similar conditions to what we have now has resulted in huge gains.
 
The last time the opportunity was this good, you could have made 25% in just six weeks. (I told DailyWealth readers about the opportunity right here.)
 
Let me explain...
 
Gold prices got most of the headlines last week... Gold fell $213 in two days. That's good for a 14% loss. But silver was the real loser...
 
Silver dropped an enormous 18% in two days (it fell 13% on Monday alone). Silver and silver-stock investors took a beating. Not many people are interested in touching silver today. And that has me interested...
 
You see, history shows that we want to buy assets no one is interested in. We want to own what investors hate.
 
When it comes to silver, we have an easy way to look at investors' interest – or disinterest – in the metal. It's called the Commitment of Traders (COT) report... Longtime DailyWealth readers will know about this one.
 
The COT report shows what real traders are betting right now. When traders are extremely bullish or extremely bearish, they serve as an excellent "contrarian" indicator. In other words, you want to bet in the opposite direction. Take a look...
 
When Traders Hate Silver, It Soars
 
The black line shows silver prices. The blue line shows the net bets (long bets minus short bets) of silver futures traders.
 
When the blue line is low, traders are betting against silver. The contrarian trade is to buy.
 
Based on history, buying at these kind of extremes leads to big gains...
 
Trade Date 3-Month Gain Gain to New High
2005 22% 105%
2007 16% 71%
2008 28% 98%
2012 25% 29%
Average 23% 76%
 
The average three-month return when you buy silver at this extreme is 23%. That's crazy.
 
But right now, our opportunity is even better. You see, these numbers lag by a week. So these are futures bets BEFORE the huge selloff in silver. After an 18% fall, traders are bound to be even more bearish today. That should lead to an even bigger rebound.
 
Most recently, we saw this opportunity last summer. I told DailyWealth readers that it was time to buy silver. Investors who followed that advice made 25% in just six weeks. And we have a similar situation today... So it's time to buy, right?
 
Not just yet.
 
You see, I want some time to pass after the big move in silver. We could still see price "aftershocks." I don't want to buy silver until those pass.
 
But we're going to have a great chance to buy silver very soon. Our clue will be when the COT numbers start to tick higher. That means traders' bearishness has bottomed. And it will give us a much safer place to enter the trade.
 
When that happens, we'll likely make 20%-plus gains in a short period of time.
 
We're not there just yet. But our opportunity to pile into silver is coming. Get ready.
 
Good investing,
 
Brett Eversole




Further Reading:

Until precious metals resume their uptrend, Steve Sjuggerud recommends putting your money in safe, high-quality stocks. These stocks perform well in nearly every market environment... and they offer a simple way to dramatically boost your income for decades. Learn how to use them to generate long-term wealth here: Boost Your Stock Market Gains 90% with One Quick Phone Call.

Market Notes


NEW HIGHS OF NOTE LAST WEEK
 
Johnson & Johnson (JNJ)… Big Pharma
Pfizer (PFE)… Big Pharma
GlaxoSmithKline (GSK)... Big Pharma
Sanofi (SNY)... Big Pharma
Abbott Laboratories (ABT)… medical devices
Walgreens (WAG)... drugstores
Rite Aid (RAD)... drugstores
Procter & Gamble (PG)... household goods
Wal-Mart (WMT)... retail giant
Coca-Cola (KO)… beverage giant
Pepsico (PEP)… food and beverage
Kohlberg Kravis Roberts (KKR)... private equity
Berkshire Hathaway (BRK)... Warren Buffett's holding company
Travelers (TRV)... insurance
Home Depot (HD)... home improvement
Sprint Nextel (S)... telecommunications
Walt Disney (DIS)... media and entertainment
Yahoo (YHOO)... search engine
Hershey (HSY)... better than gold

NEW LOWS OF NOTE LAST WEEK
 
Franco-Nevada (FNV)... gold royalties
Royal Gold (RGLD)... gold royalties
Barrick Gold (ABX)... gold miner
Yamana Gold (AUY)... gold miner
Newmont Mining (NEM)... gold miner
Kinross Gold (KGC)... gold miner
Freeport-McMoRan (FCX)... copper and gold miner
Teck Resources (TCK)... diversified mining
Vale (VALE)... iron ore miner
Alcoa (AA)... aluminum miner
ArcelorMittal (MT)... steel producer
EMC (EMC)... data storage
Apple (AAPL)... Big Tech

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