Silver Will be a Top Performing Asset in the Next Financial Crisis!

By: Chris Vermeulen | Mon, Sep 12, 2016
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The much awaited Jackson Hole speech by the Fed Chair Janet Yellen and the subsequent nonfarm payrolls data failed to "ignite" the prospects of a rate hike this September of 2016. The market now forecasts only a 21% probability of a rate hike in this month, according to the CME FedWatch Tool. The probability of a rate hike in December of 2016 stands at just above 50%, however, my readers know that we have been ahead of the market since the start of the year.

Time and again I have explained why the FED cannot hike rates in 2016. Contrary to all the market experts, my view has stood the test of time and has come to fruition. According to my research, the chances of a rate hike in December of 2016 are also very bleak, nonetheless, the FED speakers will continue to "jawbone" the dollar, the way they have been doing for the whole year.

The coming week has a number of Central Banks competing with each other to unleash their monetary easing plan, as if, that is the only solution to all the economic problems plaguing the world. Even the failure of the past seven years has not deterred them from printing more money from thin air.


$180 billion of bond buying, which is even larger than 2009:

The European Central Bank and the Bank of Japan, both combined, are purchasing a whopping $180 billion of bonds monthly, as shown in the chart below. Add to it, the new bond buying program announced by the Bank of England and the number rises even higher. All three are expected to recommend either adding to their existing bond purchases or extend their duration in their next policy meetings.

Monthly FED, ECB and BOJ Asset Purchases

This has led the Bond King, Bill Gross, to warn investors of the dangerous consequences. In a letter to clients, he wrote: "Investors should know that they are treading on thin ice".

"This watch is ticking because of high global debt and out-of-date monetary/fiscal policies that hurt rather than heal real economies. Sooner rather than later, Yellen's smooth shot from the fairway will find the deep rough," reports CNBC.


Silver is on the cusp of a massive rally:

As and when the investors realize that they are holding worthless currencies, the big money will rush into the precious metals. Consider this, the total world's investment holdings in silver are a paltry $50.8 billion, compared to $3.04 trillion in gold, as shown in the chart below.

Did you know that the hedge funds alone manage around $2.7 trillion, according to Barclay Hedge data? Even if a small portion of the trillions sloshing around out there, decides to enter into silver, the white metal will shoot through the roof.

Gold versus Silver: Total Investment and Central Bank Holdings


Traders are finally recognizing the importance of silver:

Following the poor jobs report last Friday September 2nd 2016, the traders jumped into silver, taking it higher, as shown in the chart below.

As explained in our earlier articles, investors should not only look to buy into the "white metal", they should also explore options of investing in the silver miners.

10-Minute Gold and Silver Charts


What are the silver's technicals suggesting?

Silver had a massive run from the lows of $15.83 to $21.22. No markets rise vertically, a 50% Fibonacci correction is a healthy and accepted norm. As seen in the charts below, silver too has corrected 50% of the recent rise.

The weaker hands are out of silver, whereas, the stronger hands have bought the "white metal" at lower levels. Silver is currently trading above both the 20 - day and the 50-day exponential moving average. This is a sign that it has resumed its uptrend and is set to rally higher.

Silver will reach its target of $25/oz. once it crosses above the highs of $21/oz.

Silver Chart
Larger Image


Conclusion:

As Bill Gross says, the world markets are being manipulated by the Central Banks and investing is becoming a difficult proposition. You need the help and support of an expert with an edge, to invest at the right time and to be positioned propertly for when high volatility strikes. Until volatility picks up we can only focus on short-term extreme oversol/overbought markets for opportunities. Keep watching this space and subscribe our services to get the maximum benefit of timely advice to buy and sell silver and various other asset classes.

 


 

Chris Vermeulen

Author: Chris Vermeulen

Chris Vermeulen
President of AlgoTrades Systems
www.TheGoldAndOilGuy.com

10126 Hwy 126 East, RR#2
Collingwood, ON, L9Y 3Z1

Chris Vermeulen

Chris Vermeulen, founder of AlgoTrades Systems., is an internationally recognized market technical analyst and trader. Involved in the markets since 1997.

Chris' mission is to help his clients boost their investment performance while reducing market exposure and portfolio volatility.

Chris is also the founder of TheGoldAndOilGuy.com, a financial education and investment newsletter service. Chris is responsible for market research and trade alerts for of its newsletter publication.

Through years of research, trading and helping thousands of individual investors around the world. He designed an automated algorithmic trading system for the S&P 500 index which solves his client's biggest problem related to investing in the stock market: the ability to profit in both a rising and falling market.

AlgoTrades' automated trading systems allows individuals to investing using either exchange traded funds or the ES mini futures contracts. It is supported by many leading brokerage firms including:

- Interactive Brokers
- Trade MONSTER
- MB Trading
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He is the author of the popular book "Technical Trading Mastery - 7 Steps To Win With Logic." He has also been featured on the cover of AmalgaTrader Magazine, Futures Magazine, Gold-Eagle, Safe Haven,The Street, Kitco, Financial Sense, Dick Davis Investment Digest and dozens of other financial websites. His list of personal and professional relationships approaches 25,000, people with whom he connects and shares is market insight with out of his passion for trading.

Chris is a graduate of Seneca College where he specialized in business operations management.

Chris enjoys boating, kiteboarding, mountain biking, fishing and has his ultralight pilots license. He resides in the Toronto area with his wife Kristen and two children.

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