It seems that lately the silver price has been on a roller coaster ride. We’ve seen this with several economic indicators. For example, right after the presidential election people were worried about the gold market and how it would affect the economy. Then gold started to climb and the dollar started to weaken. This has been a result of all these things and more or less serves to confirm my statement that when you put the “t” in politics, you get the “c” in the economy.
When we see price increases like this it is a reflection of a psychological reality that silver is a precious metal that has been over-hyped due to its high price in the beginning of the 2021 euphoria. Silver quickly lost its value in the beginning of this price increase. So, I’ve been watching closely this market and I’m not surprised that silver has had one of these price surges.
But, it isn’t necessarily a good thing. I mean, look at the history of investing in gold and silver. When the price goes up you invest in the precious metals because you think the prices will go back down. You don’t take profits at the market’s pace. And, you usually have a holding period of anywhere from four months to a year before you sell or maybe even longer.
Now, let’s take a look at gold. Gold usually does not go up very much until a major event occurs, like the Iraq war, perhaps the collapse of the dollar or the declaration of a currency swap by the Chinese. These things cause a huge increase in demand for gold. That is what causes price spikes. So, if you are into gold trading, it is a good idea to buy when the prices are low and sell when they are high.
If you’re holding silver, it is important not to give up. You may have seen a couple of these price spikes in a row. Hold on. Don’t get too excited. It could be that the supply is low, but the demand is high, and the prices are already quite high.
There are some silver sellers right now that have had to double their purchases just within the last month. It is not uncommon to see someone selling five times what they bought. That shows you how volatile the silver market can be. And, it also shows that people are still buying. Demand is high, the supply is high, and the prices are high. Pretty nifty, don’t you think?
Now, silver is not going to do this every time. No matter how much the gold and silver markets surge in value, there is still an intrinsic value in owning these precious metals. If you want to make money by investing in silver, you should consider a short position strategy.
The short position strategy works best when silver prices are on a downturn. That’s when you take advantage of the decline and buy your silver at a cheaper price. You then let the price of silver rally back up before you sell your stocks. That’s right. You sell all of your stocks before the price of silver drops lower than you sold them. This makes sense because as the price of silver moves lower, the price of gold usually goes with it.
Another time that the silver price surges are when markets are expecting a big change. That’s when investors are looking to put money in the market and make some money. By being a short seller, you can capitalize on the change. It’s a great time to buy silver because you can expect the price to go up after the big move.
When gold and silver prices rise, everybody wants to get in on the action. However, that’s a good thing. It means that more buyers are competing for the same supply. That means that prices will go up. You just have to be a bit careful not to drive up the price too far too fast.
Remember, demand outstrips supply so the prices will usually go up after a big move. Don’t get caught up in what other people are doing. Just stay where you are and watch the prices go up. If you wait, you’ll miss the big silver price surge.