My father is my hero. His mother died when he was 3 … his father when he was 20 years old. He was born in 1933 in a tiny village in India. At that time India was incredibly poor and every day people were starving. Somehow he put himself in college. And then Dad got a job in Bombay, India’s largest city. However, he was broken up with his family to support.
In 1974, he applied for a job in Dubai. Nobody has heard of Dubai.
“Don’t go!” brothers and sisters told him when he got the job.
The prospects in India were dire. Dubai has just found oil. He knew that taking risks in Dubai was better. It was a calculated risk.
“I have nothing to lose,” he told the family as he accepted the job.
Dubai was mostly a desert when it arrived. He went to the sheikh’s palace to drink coffee and discuss matters.
Looking back, the trip to Dubai was not in vain. Dubai has grown spectacularly. Dad earned 100,000 times more money than if he had stayed in India. By the time he died in 2000, he had transferred my sister and me to college. And he saved enough, so my mom never had to work or care about money.
The result: My dad took a risk in Dubai, and it paid off sometimes.
I am my father’s son. The calculated risk is my philosophy of investing and trading. This is how I made money for customers while on Wall Street. And that’s how I now invest my own money.
Calculated risk in financial markets means you take advantage of opportunities when the odds are in your favor. So if you invest money, you have a great chance of making money. Sure, you’ll never get a guarantee, but if I get a good chance, I bet.
Today I will show you an incredible opportunity in the precious metals market. This is a trade where the odds are in your favor as I will show you. And this is a trade in which I have invested my own money.
If you buy 1 ounce of gold today, it will cost you 80 ounces of silver. In other words, gold is 80 times more valuable than silver. This has only happened three times in the last 15 years. This is extreme. And usually when the ratio of gold to silver reaches extreme levels, two things happen.
First, you see prices rise. Period. In 2008, when the ratio reached 80, silver soared. In 2002, silver was collected almost 100%. In 1991, the metal received more than 40%.
Second, the price of silver is rising faster than that of gold.
Silver is too low
What’s going on? Why does this continue?
Gold is a precious metal that is mainly in demand. Investment demand means that people own it because they believe the price of gold will rise.
Silver has two sources of demand: investment, because it is a precious metal, and industrial demand. For example, it is used in solar energy, to create electronic circuits and as a catalyst in chemical reactions.
Approximately 56% of silver use goes to industrial demand. As a result, prices are sensitive to industrial demand. This is why gold and silver do not trade closely with each other.
Another reason is that silver is rarely found on its own. As much as 66% of silver is a by-product of copper, lead and zinc. The supply of silver increases as companies increase production of these metals. So you have a situation where the supply of silver is too much compared to the demand. Because of this, silver prices are falling, even as gold prices rise.
Delivery will not be timely
So what is happening now? Copper is about a six-year low. Zinc at a nine-year low. Leading at a five-year low. Because of these landslide prices, mining companies have reduced production of these metals. Not surprisingly, silver production is also falling sharply. Reputable research company Capital Economics estimates that production will decrease by 9.2% in 2016 and by 13% in 2017.
However, the demand for silver is high. Investment demand grew 400% from less than 50 million ounces in 2006 to 200 million ounces in 2015. Investment demand will continue to grow due to negative interest rates and financial instability that cause distrust of paper currencies.
Moreover, in 2016, industrial demand for silver will grow by 3%.
Reduction of supplies. Growing demand. The ratio of gold to silver is above 80 – the level when silver takes off from a past history. Once two three. The stars are aligned so that the metal takes off. How high? The cost of silver can be at least $ 30 an ounce, which is about 100% of its current price.
Good chances for big profits
This is the kind of trade you should love to conduct. Chances are in your favor. Of course, there are no definite things in investing, but I believe that silver is a solid bet to rise from its current price.
You can play silver by buying physical ingots or coins.
Finally, you can buy silver-focused mining companies that trade the stock market, which is how I bet. Unfortunately, there are no ETFs that would target companies that extract silver to recommend you. And it would be inappropriate to tell you to buy stocks without giving you all the facts and proper analysis.