The trend is clear, and we’ve known about it for decades: when things grow more uncertain in the stock market, the price of precious metals like silver soar. No matter what the source of people’s beliefs in the stock market, those beliefs control the trends.
When fear dominates, the market tanks, and when that happens you want to make sure silver is already well-represented in your portfolio.
So, what does that have to do with the current race for the Speaker of the House, following the resignation of John Boehner? How can this political issue in Congress possibly affect the price of silver or its wisdom as an investment vehicle in the immediate future?
It’s simple, really.
Stocks and Other Investments are HIGHLY Politically Sensitive
No matter where your politics lie, the numbers tell the truth: political uncertainty and upheaval leads to a lack of faith in the stock market’s near future, and that drives stock prices down. Threats of government shutdowns over political disagreements have become increasingly common in recent years, and this has contributed to volatility in the stock market despite the general upward trend stocks have experienced in the past few years.
Now, there are certain signs that the market is due for a “correction” or short-term downturn for economic and non-political reasons (the hiccup seen in the stock market this summer is one indicator; slowing investment and growing wariness in tech investment is another; long-term cycles also suggest we’re due for another downturn). Add a little bit of political uncertainty to the mix, and we could have a perfect storm for dropping stocks and rising silver prices.
The absence of a clear front-runner for the Speaker of the House position left vacant by Boehner is just the right type of uncertainty.
Right now, in addition to the long-standing divide between the so-called “conservative” and “liberal” members of Congress, there’s also a divide between those in the Republican party who are more moderate and those whose leanings take them farther right. Boehner has alluded to this problem as one of the reasons he is stepping down from the Speaker position, and former frontrunner for the position Kevin McCarthy dropped out of the race specifically because he doesn’t feel he’s the right person to bridge the gap.
More moderate control in the House of Representatives could mean greater political and thus economic stability, but it appears that the Republican leadership is even more fragmented than before. This means greater instability, greater uncertainty, and thus greater volatility in the stock market.
And this spells out a great time to buy silver.
Silver is a Great Investment Hedge Against Stock Market Drops
Because silver, like other precious metals, has tangible and intrinsic value, it’s a favored investment by many during times of uncertainty. Waiting to invest until the doubts are in full swing is a mistake, though—by then, the price of silver will have shot back up. Right now it’s still a bargain, but the writing’s on the wall for a change about to come.
Buying silver now is a great way to provide security against the coming bumpy ride the stock market will take while Congress gets itself sorted out.