Take Profits On Silver Wheaton

Readers who purchased Dr. Strangemarket's "Gold Boom 2016" in December or January and bought the recommended stocks have made a lot of money this year. But now it is time to take profits and sell or reduce your position in one of the stocks, Silver Wheaton (SLW).

Don't get me wrong, Silver Wheaton is a good company with an excellent reputation in the precious metals industry. The stock price has boomed from $12.42 at the start of this year to $23.39 as I write. An 86% profit in 6 months ain't bad!

But right now Dr. Strangemarket sees gold outperforming silver at least for the rest of this year. Gold will perform well either as a pure safe haven during economic, financial, political, or market crises, OR as a store of value when expectations of inflation rise and the value of the US dollar weakens. Silver on the other hand only performs best as an inflation play, when other natural resource and commodity prices are rising in general.

From April until now, silver has rallied along with the commodity sector in general. But the risk of a broad global economic slowdown is still present -- the risk was there even before the Brexit vote, and now after Brexit it is all the more serious. If evidence of global recession accumulates, gold can still do very well, but silver will struggle to keep up.

So Dr. Strangemarket now recommends focusing your precious metal investments primarily on gold, not silver. Eventually silver will have its boom, but that may happen in an economic recovery after a recession. In the meantime, I expect silver to lag behind gold. The gold/silver ratio may even rise as high as 100:1. In the ensuing recovery the ratio will fall again: a return to 50:1 would be normal. But for now, I expect gold and gold mining investments to outperform silver investments such as Silver Wheaton.