We’ve been watching the price and price movement of metals. We specifically have been looking at silver and trying to determine why silver has not bounced back a little. As a general statement, the gold silver ratio is lower than average, and that alone usually means some correction may be coming. Over the last week or so gold has bounced back and found some support levels above $1600. However, silver has not moved up correspondingly. So, this begs the question of should we be looking at silver to make a move to the upside?
Let’s consider some facts to see if maybe silver might be a good self directed IRA investment:
Silver Appears To Be Oversold
The people over at Casey Research have out together a 60 day price oscillator that is designed to detect over bought and over sold points. In reviewing their current metrics they show silver to be at one of its relatively lowest points in the last decade. There have been about 4 or 5 other points in this bull market where silver has reached such a low price point. As a general statement, when silver hits these low, over sold points, it bounces back. The question then is when will that bounce happen?
The Recovery Timeline For Silver
The average decline of the three prior corrections, where silver lost a third or more of its value, was 42.1%, and the average recovery time was 98 weeks and 4 days. If we extrapolate the same ratio of recovery time to percentage decline to the current correction, it would take 108 weeks and 3 days to return to the previous high of $48.70. Calculating from the previous peak of April 28, 2011, we wouldn’t break into new highs until May 26, 2013.
So, May 2013 sounds like a long way off, but is it? Keep in mind that one large, significant European meltdown, major banking default (which are happening in Spain), or some other event could send the metals through the roof. Remember, we are all using fiat currency that has nothing more than our belief in the Federal government as its sole basis for value, and they keep that perpetuated through money printing.
We believe that its not if, but when will silver bounces back to new highs. Remember silver is a commodity and it is used in all types of electronics. Also remember that there is not a lot of cheap silver left to be mined. If you don’t have any metals in your self directed ira portfolio, then you should consider doing so. If you do not have silver in your self directed IRA metals portfolio then you should consider doing so.
The information provided is for educational purposes only and are not a solicitation or offering of an investment, investment advice, or tax advice. You should consult with your tax, legal or financial advisor to determine the suitability of any investments made with a self directed IRA account.