Silver: The Great Buying Opportunity Approaches

April 24, 2013 at 07:21

truthing

In just the past month, silver is down 20%… and it’s the worst-performing commodity of 2013.

This is a big reason why you need to be ready to buy silver, very soon…

I know… after last week’s historic selloff (the worst in 30 years), you probably don’t want to hear about gold or silver. Based on history, buying silver in similar conditions to what we have now has resulted in huge gains.

Gold prices got most of the headlines last week… Gold fell $213 in two days. That’s good for a 14% loss. But silver was the real loser…

Silver dropped an enormous 18% in two days (it fell 13% on Monday alone). Silver and silver-stock investors took a beating. Not many people are interested in touching silver today. And that has me interested…

You see, history shows that we want to buy assets no one is interested in. We want to own what investors hate.

The COT report shows what real traders are betting right now. When traders are extremely bullish or extremely bearish, they serve as an excellent “contrarian” indicator. In other words, you want to bet in the opposite direction. Take a look…

 

The black line shows silver prices. The blue line shows the net bets (long bets minus short bets) of silver futures traders.

When the blue line is low, traders are betting against silver. The contrarian trade is to buy.

Based on history, buying at these kind of extremes leads to big gains…

The average three-month return when you buy silver at this extreme is 23%.

But right now, our opportunity is even better. You see, these numbers lag by a week. So these are futures bets BEFORE the huge selloff in silver. After an 18% fall, traders are bound to be even more bearish today. That should lead to an even bigger rebound.

So it’s time to buy, right? Not just yet.

We could still see price “aftershocks.” But we’re going to have a great chance to buy silver very soon. The clue will be when the COT numbers start to tick higher. That means traders’ bearishness has bottomed.

When that happens, we’ll likely make 20%-plus gains in a short period of time.

We’re not there just yet. But our opportunity to pile into silver is coming. Get ready.