Silver Investments May Be Priced to Purchase after Recent Retreat

Silver investments may be priced to purchase after a recent retreat that followed a big jump.

Silver investments surged earlier this year and the precious white metal has a historic pattern of lagging behind the advance in gold but ultimately catching up and surpassing the percentage gain in the latter. The price of silver has outperformed gold and even the technology-fueled NASDAQ Composite Index so far this year.

Thus far in 2020, silver soared 41.54%, the NASDAQ Composite jumped 30.35%, gold gained 26.51%, the S&P 500 climbed 8.58% and the Dow Jones Industrial Average nosed up 0.40%, as of the close of trading on Friday, Aug. 28. The strong performance of silver and gold, boosted by more than $6 trillion in aid from federal stimulus and Federal Reserve actions, followed a recent pullback in their prices that gives investors who had waited to gain a second chance at purchasing precious metals, as well as related stocks and funds.

Silver Investments May be Priced to Purchase After Dip

“After the tumultuous rise in gold and silver, profit-taking was in order,” Rich Checkan, president and chief operating officer of Asset Strategies International, a full-service tangible asset dealer in Rockville, Maryland. “I believe this most recent bout is over.”

Rich Checkan, president, Asset Strategies International

Meanwhile, the value of the U.S. Dollar Index has fallen 4.34% so far 2020, as of Aug. 28. The index closed at its second-lowest level in more than two years, since only on Aug. 18 did it slip lower in that multi-year period.

In terms of purchasing power, the U.S. dollar has weakened 14.6% since March 29, 2020, when the U.S. currency could buy .00068 of an ounce of gold, compared to just .0005806 of an ounce on Aug. 28, said Patrick Heller, communications officer at Michigan’s largest rare coin and precious metals dealer, Liberty Coin Service, of Lansing.

The U.S. Dollar Falls in Value, as Silver and Gold Prices Surge

“All world currencies have fallen against the price of gold since mid-March, with the U.S. dollar having fallen further than all but a handful of foreign currencies,” Heller said.

Retail customers at Liberty Coin Service’s store, just three miles from Michigan’s Capitol building, have risen strongly among patrons who are buying bullion-priced physical silver and gold, Heller said. Increased media coverage about the drop in the U.S. dollar likely has been a big reason, he added.

Many of those customers are first-time buyers, Heller said. Liberty’s sales in July more than tripled June’s total, he added.

Silver Investments May be Priced to Purchase, Coin Dealer Says

Month-to-date sales through Aug. 27 at Liberty Coin Service are getting close to topping July’s total and may well do so by Monday, Aug. 31, Heller continued. News about gold reaching all-time high prices, without factoring in the effects of inflation, is also playing a role in boosting demand from retail customers, he added.

“In July, our quantity of purchases from the public were still only 82% of the average per month from January 2016 through December 2019,” Heller said. “However, the average transaction size was so large that it was our second-largest total dollars spent buying from retail customers of any month since January 2016. Only August 2017 was higher in dollars spent, though on a much greater number of transactions.”

Dividend-paying Silver Investments May be Priced to Purchase

Investors can buy silver mining stocks and funds, too. Those who want dividends may be interested in Global X Silver Miners Fund (NYSE:SIL) as a proxy for silver.

SIL offers a 1.16% dividend yield and gained 4.05% on Friday, Aug. 29, to boost its year-to-date (YTD) return to 48.47%. Its returns are 4.99% for the past week, a loss of 0.35% for the last month, a rise of 40.35% for the past month and 49.07% for the last 12 months.

Chart courtesy of www.stockcharts.com

Kramer Eyes Dividend-paying Silver Investments May be Priced to Purchase 

“For silver itself, I prefer Wheaton Precious Metals Corp. (NYSE:WPM), which is less about mining than pure silver trading,” said Hilary Kramer, host of a national radio program called “Millionaire Maker” and head of the Value Authority and 

GameChangers advisory services. “They know what they’re doing and pay a dividend. Rising silver prices will enhance the shareholder payout.”

Columnist and author Paul Dykewicz interviews money manager Hilary Kramer, whose premium advisory services include 2-Day Trader, Turbo Trader, High Octane Trader and Inner Circle.  

Wheaton Precious Metals offers a current dividend yield of 0.78% and has a forward price-to-earnings ratio of 50.40%. The stock’s returns are 79.29% YTD, 2.47% for the last week, -4.36% for…