It is starting to look like there is great weakness in the silver and gold bubble that started nearly one decade ago. Recently, the price of silver has plummeted, which commentators have said is partly to do with the COMEX (CME Group’s) margin hikes. An increase in the cost to buy silver on the futures market means the most aggressive buyers and sellers alike have to unwind their positions.
Is it any surprise that gold and silver were rising as they were ignored, and have been falling when they become recommended? Not really.
In fact, the reasons for such a movement are generally pretty simple: institutions ride the wave up, and they exit by selling off to retail trend followers. We’ve seen this phenomenon happen time and time again, and commodities are no different than are any other investments.
Risk is Gone
There is something to love about great business models. Two companies I love, Amazon and Netflix, have interesting businesses and great corporate executives.
But as for Silver Wheaton, I think I’m just in love with the execution of a high-risk, high-reward business that requires no physical effort. Read more…