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Nobody talks about silver anymore.
That seems odd, since it was only a few months ago that silver was all everyone wanted to talk about. But it makes sense if you think about it.
Back in January, the price of silver was going parabolic. It had broken out above a decades-long high of $50 an ounce and traded up to $115. That sort of a move is going to get folks talking.
It’s also going to get folks buying at the worst possible time.
That’s the nature of parabolic moves. Investors struggle to fight the enthusiasm. They see everyone else making money. The fear-of-missing-out (FOMO) takes over. So, they chase prices higher into a parabolic blow-off top.
As we’ve seen so many times before… parabolic moves always end badly. And, that proved to be the case with silver. Take a look…
When a parabolic move ends, the ensuing decline tends to take back all the gains of the rally. Silver went parabolic when it broke above $55 per ounce. It closed yesterday within spitting distance of that level.
That’s painful for anyone who bought silver into the parabola. And, it’s a good reminder to investors of the dangers of chasing the latest FOMO trade.
This decline, however, has created a compelling buying opportunity for folks who follow a more contrarian type of strategy.
Think about it…
From a contrarian perspective, the absolute worst time to buy an asset is when everyone else is talking about it. We saw how that played out when everyone was talking about silver earlier this year.
Now though, silver’s popularity has faded along with its price. Just about no one is talking about it anymore. That condition often means it’s a good time to buy.
Of course, that doesn’t mean silver can’t go even lower from here. There’s no guarantee we’re sitting right at the bottom.
All we can say with certainty is, now is a far better time to buy silver than it was in January.
Traders who were thinking about buying silver earlier this year ought to take a look at it now.
Best regards and good trading,
Jeff Clark
Editor, Market Minute