Our Approach to Investing in Silver as a Market Hedge

Silver has a fascinating history. For centuries, it was a cornerstone of global currency, from the Roman denarius to the original British pound, which was literally a pound of silver. Beyond its use in jewelry and household items, its antibacterial properties have made it essential in medical devices for just as long.

Today, many traders know it by a different name: the "devil's metal." A quick look at its price over the last 45 years explains why. After hitting a high of over $41 in early 1980, it crashed to under $5 just two years later. Even now, over four decades later, it hovers just below $23. This kind of volatility has trapped countless investors who bought at the wrong time.

A Strategy for a Volatile Asset

Our strategy is built to do the opposite—we focus on buying when prices are at rock bottom and panic is setting in. Looking at our performance with silver futures from 1982 to 2023, this contrarian approach has paid off. Out of 24 trades, 23 were profitable, delivering an average annual return of 4.38% and more than tripling our initial capital.

So, this brings up an obvious question: If the returns are often lower than what you might see from stock investing, why do we bother with commodities at all?

For us, the answer has little to do with chasing the highest possible returns. Instead, commodities play a crucial role in diversification. This is a key concept for anyone, especially those new to the market or , to grasp: not every asset in a portfolio is there to be a home run hitter. Some are there for defense.

A Safe Haven During Storms

Silver, and other commodities, act as a safe haven during rough periods in the stock market. If you look at when our strategy triggered purchases in commodities, you'll see it’s often very different from when we bought stock indices. During major downturns in , many people pull their money out of stocks and move it into precious metals for safety.

This kind of disciplined buying can be thought of as a form of —a methodical way to protect and grow capital. The goal isn't just about maximizing gains but also about building a resilient portfolio. Commodities aren't our primary focus; they are a strategic allocation designed to add a layer of protection against the volatility of . Our approach to is less about quick wins and more about long-term stability.

Having covered our final commodity, it’s time to move into a different world entirely—one where the risks and potential rewards are even more extreme: cryptocurrencies.