Silver

Financial Disaster Insurance Is on Sale... Here's What to Buy

Over the past 33 months, silver is down 29%. At $14.65 per ounce, it trades just 7% above its late 2015 low.

Over that same span, gold is down 7%. At $1,270 per ounce, it trades 21% above its late 2015 low.

Neither of these precious metals has performed well in recent years... And as long as you haven't put too much of your wealth into them, their weak performances shouldn't bother you.

You may even see it as a good thing...

After all, the benchmark S&P 500 Index is up 36% since silver topped out 33 months ago. If you had 5% of your wealth in gold, 5% in silver, and just 30% in stocks during that period – as a simplified example – that portion of your portfolio would be up 22.5%.

Said another way, that 40% of your portfolio would have led to a 9% increase in your total net worth... Not bad.

On the other hand, gold and silver often perform well when fear takes hold... when the markets are in turmoil. So if the precious metals had soared, it likely would have meant poor performances in stocks and other asset classes.

With the same asset allocation as the example above, if gold and silver each doubled while the stock market fell 30%, your net worth would only rise 2.5%.

You may like gold and silver. But chances are, you'll be better off if precious metals don't soar.

In that way, precious metals are a lot like insurance. You want to have it... But you hope you never have to use it.

That being said, you may want to reread the last few paragraphs. With just 10% of your wealth in precious metals, you could still make money during a 30% crash in stocks.

Now, the numbers above are hypothetical. But the idea is not. Precious metals can serve as excellent financial-disaster insurance. And today, as always, we suggest you own precious metals... even with their recent, poor performance.

And today, we strongly recommend you consider buying silver instead of gold. It's a far better value...

As regular DailyWealth Trader (DWT) readers know, by looking at a ratio chart, we can see which of the two metals is relatively cheap and which is relatively expensive.

In the chart below, you can see the ratio of gold to silver. This shows how many ounces of silver it "costs" to buy one ounce of gold over the last 45 years.

The average is 60 ounces of silver to one ounce of gold. Today, it costs 87 ounces of silver to buy an ounce of gold. So gold is 45% more expensive than its long-term average. As you can see, gold was more expensive in the early '90s... But other than that, it's more expensive than it has ever been...

 The other side of that, of course, is that silver is extremely cheap relative to gold. It's a much better deal.

We don't know when this financial-disaster insurance will pay off. It could be this year, next year, or even longer. And really, we're not looking forward to when it does. It will likely be a time of economic, geopolitical, and/or social turmoil.

When it does pay off, though, you'll be glad you have it. Precious metals tend to do well during turbulent times.

Right now, the gold-to-silver ratio is at a 24-year extreme. Gold is relatively expensive. And silver is relatively cheap.

So if you're planning on picking up some financial-disaster insurance, remember the chart above. You'll get the most bang for your buck by buying silver.

– Ben Morris and Drew McConnell