As the stock market streaks higher and higher it’s easy to believe it will continue to rise indefinitely. In fact, it’s impossible to persuade wealthy people, who employ asset managers that anything can go wrong. They have always seen the market come back no matter how steep the correction. Too much success breeds arrogance and that’s happening in some quarters. Edmond Burke (1729-1797) said, “There was never a point of pride that was not injurious to a man.”
So if you’re feeling cocky about your gains and impervious to fears of loss, you may be facing a comeuppance. A wag said it another way, “The sun don’t shine on the same dog’s butt every day.” The sun hasn’t shined on silver owners for some time. Consequently, that seems to make it the perfect hedge for investors who are enjoying exorbitant gains in stocks, bonds and real estate. If you are convinced that nothing can go wrong with your portfolio, and you believe you are a particularly clever investor, that is a danger sign. “Pride goeth before a fall.”
When everything is flying high but precious metals, it’s a good time to practice “contrary opinion” investing. Silver is certainly the epitome of an undervalued asset that is currently out of favor. Silver humbles us and that is a good thing. That’s when we make our best decisions. The time will come when the self-satisfaction and arrogant pride of certain investors will be replaced with worry and even fear. That will likely be a time of joy for those who put a percentage of their net worth into silver. It could happen at any time. I’m not predicting an imminent crash, but the higher things go, the greater the potential nose dive and ultimate gloom. It just makes sense to hedge against a bear market with silver.