Silver Linings Under 2020 Virus Cloud

May 14, 2020

There is Always Silver Linings under the Cloud

Increasing numbers of articles focused on gold and silver can be found in many good journals.  Gold and silver are regarded as safe haven assets during global relentless currency printing due to the cloud of Covid-19 pandemic. Despite the bad news, there is always the proverbial hopeful encouragement of “silver linings under a cloud.”

In this article we show two examples with forecasts of their value propositions.

Example 1 - Silver and Gold Suppression

We have discussed this high ratio abnormal in our previous articles. The rapid decrease in GSR in recent days, leading to both high increasing asset Values in years to come.

Chart 1 – Gold to Silver Ratio (GSR) at Historical High

Based on our anticipated value of GSR = 60, we estimated the following asset values:

  • Gold Price = $2500/oz (from current $1700/oz, with 47% increase)
  • Silver Price = $40/oz (from $15/oz, with 167% increase)

Clearly the rewards for wise asset management will be high, with silver giving a better return than gold.  In the following example, we showed our estimate for a silver mining company based on streaming and collecting precious metal royalty.

Example 2 – Silver Mining Company

A particularly good example is Wheaton Precious Metals (WPM) which has had a tremendous high return since 2006.  In recent years since 2016, the return seems to be accelerating.  The company has low risk with few employees and good underlying silver and gold assets.  The following chart showed the price performance. Chart 1 – High Performance of WPM since 2006

Our key observations are as follows:

  • Since 2006 to present, WPM return is 1475% (from price 2.79 to 43.30) for 15 years.
  • We estimated WPM return will be 38% (from price 43.30 to 60) for less than 1 year.

The above is just an example of silver linings that can be found.  There are others.

Summary

During this difficult environment, we all need to protect our family and our hard earned assets.  May we all have faith in the One who holds our future.

We are not certified or qualified financial advisors.  Please consult your certified financial advisors for actual trading and investing.

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F.T. Dao is a private investor and recently left the corporate world for technical analysis of stock markets.  He holds a PhD degree in physics and has done technical analysis of the market on the side for many years.  He welcomes constructive discussion and can be reached at:  ftdao245@gmail.com  , ftdao245@comcast.net

Silver has 47 protons and 61 neutrons