On March 12, 2020, as soon as NIA saw the gold/silver ratio hit 100 for the first time in 29 years, NIA officially suggested the iShares Silver Trust (SLV) December 2020 $15 call option at $1.44.
At the time, silver was trading for $15.66 per oz vs. a gold price of $1,566 per oz. With a gold/silver ratio of 100, silver was trading as an industrial metal only with absolutely no monetary premium. With the economy beginning to shut down on March 12th, we knew that a short-term decline in industrial demand for silver could cause it to temporarily dip even lower, which is why we suggested a call option that expired 9 1/2 months into the future. We were 1,000% certain that regardless of how silver traded in the weeks that followed, the Fed's trillions of dollars in money printing would cause silver to explode higher as soon as the economy began to reopen... due to recovering industrial demand and the restoration of silver as a monetary metal.
On Friday, silver surpassed its most important key breakout point, its 200-day moving average of $16.94 per oz. Silver settled Friday up by $0.915 or 5.66% to $17.07 per oz! NIA's SLV December 2020 $15 call option finished Friday at $2.20 for a gain of 52.78% from NIA's March 12th suggestion price!
This evening, silver is up another $0.32 or 1.87% to $17.39 per oz. The gold/silver ratio after peaking at a record high of 126.60 on March 18th, is currently at a level of 101.60 its lowest level since March 12th when we announced our SLV call option suggestion. The 200-day moving average for the gold/silver ratio is 92.90, which we expect it to return to by the end of this month!
Based on the current gold price of $1,766 per oz, a return to a gold/silver ratio of 92.90 would cause silver to rise to $19 per oz. If silver hits $19 per oz this month we expect our SLV December 2020 $15 call options to rise another 50% to $3.30.
If you read our initial March 12th SLV call option announcement alert by clicking here, you will see that we had a second major reason for suggesting SLV call options on the day that we did. We explained that SLV's volatility had fallen to a near record low in comparison to GLD's volatility. We provided you with a chart of the silver volatility index (VXSLV)/gold volatility index (GVZ) ratio, which had fallen to a near record low of only 1.18.
At the time of NIA's March 12th SLV call option announcement, the VXSLV volatility index was only 34 and we knew it was due for a dramatic increase, which would cause all SLV options to trade at much larger premiums. NIA was right! Over the following four trading days, the VXSLV volatility index exploded by 234.35% to reach a record high of 113.68. VXSLV has never returned to 34 since then and finished last week at 41.64, meaning that SLV call options have a 22.47% higher volatility premium today than they did when NIA made its SLV call option suggestion on March 12th!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. This message is meant for informational and educational purposes only and does not provide investment advice.