For most MoneyWeek readers, the Reddit saga began as an intriguing distraction, but not something with a huge impact – not many of us are invested in struggling US retail chains. However, then silver came onto the radar of the WallStreetBets gang. As a result, it shot up by more than 10% to over $30 an ounce earlier this week, before suffering a sharp drop the next day. So what should you be doing if you own it?
Our view is quite simple: write it off as a blip. Silver is volatile at the best of times. While the Reddit story resurrected many of the long-running conspiracy theories surrounding silver (mainly to do with investment banks manipulating the price, which is not entirely without basis in fact, but not something you can do anything about), anyone who owns silver now should be doing so because they believe in the bullish macroeconomic case for owning it, not because they expect an imminent short squeeze.
As Eoin Treacy notes on fullertreacymoney.com, “the big difference between silver and GameStop is that there is a fundamental reason for being interested in silver. The world is awash with liquidity and governments are intent on achieving their inflation goals come what may”. So it’s worth having some exposure. But treat it as a speculative part of your portfolio. While gold broadly hangs onto its buying power over the very long term, it still endures long periods of underperformance, and silver is far worse on this front – it still hasn’t surpassed its 1980 and 2011 peaks in nominal terms, let alone adjusted for inflation. So in terms of asset allocation, view silver as being part of your equity allocation – same as your gold mining stocks – rather than part of your “buy and HODL” physical gold stash.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
-
Digital Services Tax: will Reeves let big tech off lightly to avoid tariffs?Rumours are circulating that the Digital Services Tax on big tech companies could be cut as Rachel Reeves seeks to appeal to president Trump
-
Rachel Reeves set to increase penalties for filing tax returns lateThe Chancellor will announce hikes to penalties for late tax returns in her Spring Statement as she scrambles to raise an extra £1 billion a year. Here’s what you need to know
-
Weight-loss drugs could revolutionise the economy – the investments to buy nowThe new generation of weight-loss drugs are a boon for the overweight, but they also promise to change our relationship with food and revolutionise the economy
-
Find tomorrow’s Asian giants while they are still smaller companiesOpinion Nitin Bajaj, portfolio manager of the Fidelity Asian Values trust, picks three Asian companies to invest in.
-
AI will maintain Moody’s market lead, says Stephen ConnollyOpinion Veteran data provider Moody's has adapted well to the modern world, and is one of Warren Buffett’s longest-held investments
-
Is BlackRock World Mining gearing for a recovery?Opinion After a frustrating year, BlackRock World Mining is positioned for growth and to capitalise on the sector's recovery
-
Should you limit exposure to US tech stocks?An end to the AI boom would shake both US funds and global trackers. Here’s one way to trim exposure to US tech stocks
-
The mystery of America’s gold and why an audit mattersHow much gold does the US actually have? Dominic Frisby explains why it matters
-
Art vs AI: artists’ uprising takes on the botsAI performs impressively, but it’s all based on human work that was taken without payment. The government thinks this is fine. Copyright holders beg to differ
-
The benefits of a stock bubbleOpinion We tend to think of stock bubbles as bad things but, as the dotcom craze shows, good things can come from them, says Matthew Lynn
