Written by Bryan Lutz, Editor at Dollarcollapse.com:
If you want to invest in gold and silver, you have to be a contrarian.
Like Rick Rule says…
“You’re either contrarian or you’re a victim.”
That’s because Rick Rule has decades of experience in the precious metals, and junior mining sectors as a bullion seller, and as a successful investor in junior mining stocks.
There are three ways to invest in gold and silver based on contrarian principles.
In other words, the market is going one way, you go the other.
1. The Gold/Silver Ratio
The gold/silver ratio tells you what is cheaper, gold, or silver.
When the ratio is past 100, silver is cheap because the market is buying up gold.
When the ratio is down toward 70, buy gold.
Right now, the ratio is headed down toward an even playing field, 80:1. But the most of the markets expect silver to explode any time now. It almost hit $40 this week. If silver keeps driving up, the ratio will go down.
And that means, relative to silver, gold is cheap.
So there are two ways to trade money for money here.
- Buy silver and sell high.
- Wait and buy gold when the ratio lowers to 70.
2. What goes up must come down, and what goes down must go up.
That is a law of nature.
Cycles happen everywhere, including in the safest of the safe major producers of silver like Hecla Mining.
Hecla is the #1 silver producer in the world.
Hecla has been trending down for almost 45 years.
It’s gone all the way from 30-something dollars a share in the 1980s, to about $6 today.
And silver prices aren’t even adjusted for inflation.
Let’s imagine silver and gold prices rising together.
That’s at least a 5X return if Hecla were to rise to where it was 45 years ago.
3. Equities to Commodities also tells you what’s cheap. Commodities are at their cheapest valuation compared to stocks in the last 50 years.
You don’t have to be a genius to buy low and sell high.
You just have to be contrarian.
And right now we are seeing ridiculous valuations in the stock market along with ever increasing all-time-highs for the S&P 500.
As you can see above spikes in commodities have their own bubble symmetry, which tells you something about when to sell and when to start moving back into equities.
