Silver officially entered a new bull market this week, decisively crossing the necessary +20% threshold. Speculators and investors alike are returning as awareness spreads of how radically undervalued silver is compared to prevailing gold prices. When silver awakens to a new bull market after a long bearish slumber, massive gains are usually unleashed. Silver’s tiny advance so far is just the tip of the iceberg.
This Tuesday, silver surged 4.4% higher on strong Asian bidding in parallel with gold. The catalyst was fascinating, China finally launching its long-awaited yuan-denominated gold benchmark. China is the world’s largest gold producer, importer, and consumer, a commanding position that should grant it much bigger say in the gold industry. The new yuan gold price will ultimately challenge London’s century-old hegemony.
The prospects of more Chinese with their deep cultural affinity for precious metals having easier price discovery and access catapulted silver into bull-market territory. Its previous best close of 2016 about a week earlier was only 18.5% above its 6.4-year secular low in mid-December leading into the Fed’s first rate hike in 9.5 years. Tuesday’s big Chinese silver rally boosted this young upleg’s gains to 23.7%.
That propelled silver decisively across that official new-bull-market metric of +20%. Interestingly, silver was even faring better than gold. While gold entered new-bull-market territory in early March, at best as of the middle of March it was only up 21.0% from its own mid-December 6.1-year secular low. While silver got off to its usual slow start, it has already surpassed gold’s gains. This outperformance will mount.
Silver’s new bull should surprise no one. Late last year, I extensively discussed the anomalously-low silver prices and this metal’s resulting vast upside potential. In early October I recommended a new long-term investment in an elite silver producer to our monthly-newsletter subscribers. As of Tuesday it was already up 208%, a triple in less than 7 months! I wrote about “Silver’s Deep Undervaluation” in late October.
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