Position For The 2,500% Silver Boom
The Silver Signal is telling us it’s time to buy and we could see as much as 2.500% return…

History of Silver

Silver, like gold, has been considered a reliable store of wealth and value for thousands of years

When looking back through history, we find the metal has been used as a medium of exchange in many societies and it carries this same reputation for reliability to this day.

Historians have found evidence that shows Silver was being used by craftsmen to make ornate designs and jewelry ss far back as 4000 BC.

And for thousands of years, silver was the main source of wealth and facilitated trade through Asia, Greece, Italy, and Spain.

Through the rise and power of the Roman Empire, silver continued its trend as dominant money from about 500 BC to about 3 AD.

Silver has continued its dominance of money for over 2500 years, proving itself as a superior form of money because it has the most powerful and essential qualities of great money, 

such as:
  • Proven Medium of Exchange
  • ​Unit of Account
  • ​Portable
  • ​Divisible
  • ​ Interchangeable
  • Proven Medium of Exchange
  • ​Unit of Account
  • ​Portable
  • ​Divisible
  • ​ Interchangeable
While the Roman Empire was pretty much “the world” back in its day. After the fall, we can see the world adopted a “Silver Standard” which was widespread and included: China, India, Bohemia, Great Britain, and the United States.
The United States used silver as it’s standard for money for about the first 40 years of its existence, while the U.S. was on a bimetallic system of gold and silver.

However, silver coins were the favored currency, and domestic purchases made with gold were rare. The Founding Fathers wrote a bi-metallic gold-silver standard into the United States Constitution.

Gold / Silver Ratio

Gold and Silver had always worked together as a way to be used for larger and smaller denominations as the US was doing in its early days. 

We can see as far back as 3100 BC, there is evidence of a gold-to-silver value ratio in the code of Menes, the founder of the first Egyptian dynasty. In the Menes code, it is stated: “one part of gold is equal to two and one-half parts of silver in value.”

The gold-silver ratio is an expression of the price relationship between gold and silver. The ratio shows the number of ounces of silver it takes to equal the value of one ounce of gold

Historically, the gold-silver ratio has only evidenced substantial fluctuation since just before the beginning of the 20th century.

For hundreds of years prior to that time, the ratio, often set by governments for purposes of monetary stability, was fairly steady, ranging between 12:1 and 15:1.
The Roman Empire officially set the ratio at 12:1, and the U.S. government fixed the ratio at 15:1 with the Mint Act of 1792, in which it defined a dollar in regards to silver.

A dollar was to be 371.25 grains of silver, equivalent to about three-fourths of an ounce. This measure was in harmony with the Spanish milled dollar, popular and used at the time as a standardized currency.
By the early 1800s, Gold started to become a more dominant form of money, as the rise of Central Banks started to grow more prevalent as it was worth more and was easier to store large sums of money. 

The classical gold standard began in England in 1819 and spread to France, Germany, Switzerland, Belgium, and the United States.

Each government pegged its national currency to a fixed weight in gold. For example, by 1879, U.S. dollars were convertible to gold at a rate of $20.67 per ounce. These parity rates were used to price international transactions. Other countries later joined to gain access to Western trade markets.
Of course, when President Roosevelt set the price of gold at $35 an ounce in 1934, the ratio began to climb to new, higher levels, peaking at 98:1 in 1939.

 Following the end of World War II, and the Breton Woods Agreement of 1944, which pegged foreign exchange rates to the price of gold, the ratio steadily declined, nearing the historical 15:1 level in the 1960s and again in the late 1970s after the abandonment of the gold standard.
From there, the ratio rose rapidly through the 1980s, peaking at the 100:1 level in 1991 when silver prices declined to a low of less than $4 an ounce.

For the whole of the 20th century, the average gold-silver ratio was 47:1. In the 21st century, the ratio has ranged mainly between the levels of 50:1 and 70:1. The lowest level for the ratio was 32:1 in 2011. 

There is wide disagreement among market analysts and traders regarding the current norm or expected average level for the gold-silver ratio. Some analysts point to the 20th-century average ratio of 47:1, while others argue that a new, higher average ratio level has been established since the millennium. Other analysts continue to argue that the ratio should eventually return to much lower levels, around 17:1 to 20:1.

Silver Signal

With investing, we never try to predict but rather read the signs and indicators to get a signal to buy, sell or hold.
We try to find as many of these signs and indicators as we can to get as complete a picture as is possible.

One important indicator we often look to for silver has triggered a “buy” signal - only 6 times over the last 40 years, and it happens whenever we have a bull market in precious metals.

And each time we have seen this indicator fire, we have seen Silver outperform Gold and the rest of the market.

As we explained above, throughout history, silver and gold have moved together, but never perfectly together. We typically see the price of silver lag compared to what gold is doing.

 But when we see gold make big moves in the price like we have seen this year, history tells us we should anticipate a very similar move coming to silver.. and soon!

As silver is a smaller and more volatile asset, when it does make its move to catch back up with gold, they can take off fast!

Over the last 12 months, the price of gold has jumped over 24%
But when we look at the price of silver, it's only gone up 14%, which is a little more than half of the gains we have seen in Gold.

This is a signal we like to see.

Over the past 40 years, the gold to silver ratio has averaged around 60. 

As we explained above, this means it would take 60 oz of silver to buy 1 oz of gold. I know many will go further and look at the Historical ratios of 15 to 1, but in my analysis, I think it makes more sense to look more at recent histories after the US left the gold standards, to get a more conservative approach.

 Silver and gold don't always keep a perfect ratio, like most things they would sell back and forth getting closer and farther apart which is why we try to find the average number. 

During times when the price of precious metals has been beaten down, we have seen the ratio grow to more than 80, with the record being 99 Jan 1991. 

But when silver starts to catch up, it can often overshoot the ratio as we saw back in 2011 when the Gold to Silver ratio got all the way down to 30.
Currently, this ratio is all the way up near historical records, and way past the historical average of 60.

This tells us the “Silver Signal” is showing us a bottom could be in for silver.

We can also see when looking at the historical prices of Gold and Silver, that when the prices of silver get too far behind Gold, they rapidly try to catch back up. And for the last 5-6 years, the price has gotten too far apart, meaning we expect Silver to catch back up soon .

The Trend

As you know, I believe we are seeing the global currency system collapsing right before our eyes. 

We can see Central Banks accumulating more gold right now than at any time in history since the break from the gold standard in 1971.
  
The governments and central banks have driven interest rates to zero and even negative. These policies, combined with the central banks' practice of buying their own sovereign bonds (so-called "quantitative easing"), are causing irreparable damage to the world's paper currencies... As a result, central banks, and investors are fleeing to precious metals as a means to store wealth.

And as the trend to continue to buy gold increases, silver will continue to go along for the ride. In the bull market cycles of the past, we have seen silver outperformed gold and we expect that to be the case again this time... 

meaning silver stocks are about to take off.

I believe we are on the cusp of a historic bull market in precious metals that could last several years. The next bull run is just getting started.

This is why I have put together a couple of recommendations that will give you exposure to gold's less expensive, more volatile cousin – silver.

While some of these companies also own gold assets, I believe these are the best stocks to own to take advantage of silver's coming move higher.
Before we get to the details, remember... 

In the 4 Pillar Portfolio, in the Chaos Hedge Allocation, we split up out allocation into several types of companies. 

For full details, refer back to Module 5 and go through the section again. Also, make sure to download and read through the glossary of key resource-investing terms, some of which we reference in this report.

Wheaton Precious Metals (NYSE: WPM)

Wheaton has been the largest precious metals streaming company in the world
  
What is streaming
Streaming is a unique business model in which it does not do any of the actual mining, but rather pays upfront, for silver from mines that it does not own or operate.

Streaming is basically the purchasing of the metals that come as a by-product of the mining of other metals...

For example:
It has been estimated that approximately 70 percent of all the silver being mined comes as a result of mining other metals. For example, a gold mining operation may find a small amount of silver when it is mining its gold. WPM uses silver streaming to leverage this situation.

Silver streaming is basically the purchasing of the silver that comes as a by-product of the mining of other metals...

Typically, WPM currently pays about $4 for an ounce of silver and nearly $400 for an ounce of gold. Plus, it allows for small adjustments to inflation in most contracts. WPM has a portfolio of long-term purchase agreements spread across 30 different operating mines and development projects.

Having a fixed cost to buy the silver is great when the prices are high, but not always so great when the prices are down. And that has been the case over the last few years.

Over the last 2 years, WPM has seen a decline of almost $100 million dollars in revenues as the price of silver has remained low.

However, recent information coming out of the company States they expect this trend to reverse and expect the company revenues to add close to $160 million over the next two years, which would push revenues up to almost $1 trillion dollars by the end of 2020.

Wheaton's revenues expected are due to the price increases in gold and Palladium, which will help offset any further declines in silver.

Wheaton's CEO Randy Smallwood said :
"Wheaton's portfolio of high-quality, long-life assets continues to deliver strong results with over $140 million in operating cash flow generated in the third quarter of 2019, Gold and silver prices increased on average approximately 17% over the previous year, while our cash flow and net earnings increased by over 30% and 100%, respectively. These solid results once again demonstrate the strength of Wheaton's business model, which focuses on reducing risk while providing significant leverage to higher commodity prices."

Wheaton has been a top-performing company for a long time and we expect it to outperform in the coming boom in precious metals and a great way to play the snapback in Silver prices. 
 
Action To Take: Wheaton Precious Metals Corp. (WPM)
Buy Up To: $47.00
Stop Loss: 30% trailing stop
Allocation: Chaos Hedge
Category: "Major Producers and Royalty Companies"

Pan American Silver (Nasdaq: PAAS)

Pan American Silver is the world’s premier silver mining company, with large silver reserves and a diversified portfolio of producing mines. They own and operate 10 mines located in Mexico, Peru, Canada, Bolivia, and Argentina.
Over the last four quarters, the company has surpassed consensus EPS estimates two times.

Pan American Silver, which belongs to the Zacks Mining - Silver industry, posted revenues of $352.19 million for the quarter ended September 2019, surpassing the Zacks Consensus Estimate by 6.04%.

This compares to year-ago revenues of $187.72 million. The company has topped consensus revenue estimates just once over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

Pan American Silver shares have added about 13.6% since the beginning of the year versus the S&P 500's gain of 22.7%.

And we are not the only ones taking notice. 

One indicator I always like to look at is where the “smart money” is, this refers to Wall Street and Hedge funds.
And when looking at the smart money, they appear to be seeing the same positive things.

 The number of bullish hedge fund positions inched up by 5 lately pushing them up into 22 major hedge funds' portfolios at the end of the third quarter of 2019.

This number is up from 15 only one year ago, and of the existing hedge funds that were already holding PAAS, they have increased their position sizes.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the most valuable position in Pan American Silver Corp. (NASDAQ:PAAS). 

Renaissance Technologies has a $124.2 million position in the stock, comprising 0.1% of its 13F portfolio. 

Sitting at the No. 2 spot is David Greenspan of Slate Path Capital, with a $56.4 million position; 3.7% of its 13F portfolio is allocated to the company. 

Remaining hedge funds and institutional investors that hold long positions contain Israel Englander's Millennium Management, Brian Ashford-Russell and Tim Woolley's Polar Capital and Eric Sprott's Sprott Asset Management. 

In terms of the portfolio weights assigned to each position, Sloane Robinson Investment Management allocated the biggest weight to Pan American Silver Corp. (NASDAQ:PAAS), around 7.64% of its 13F portfolio. 

Greywolf Capital Management is also relatively very bullish on the stock, setting aside 6.64 percent of its 13F equity portfolio to PAAS.

Institutional investors own about 51% of Pan American's shares and we want to own them too.
Action To Take: Pan American Silver (Nasdaq: PAAS)
Buy Up To: $33.50
Stop Loss: 30% trailing stop
Allocation: Chaos Hedge
Category: "SMALL PRODUCERS"
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