Lien Flags 'Buy-the-Dip' Opportunity as Gold and Silver Pull Back
Gold and silver prices have pulled back in September, with gold dipping from near $2,850 to around $2,600 per ounce, while silver has dropped towards $29 an ounce. Kathy Lien of BKTraders and Prop Traders Edge advises investors to 'buy the dip' in this scenario, focusing on strategic positioning rather than short-term trading plays.
Lien points out three major structural drivers supporting metals: persistent global inflation, central bank gold buying exceeding 1,000 metric tons annually, and the ongoing interest rate easing cycle. Historically, when the Federal Reserve cuts interest rates, gold tends to outperform other assets, yielding an average return of 8% in the six months following the initial rate cut.
The gold-to-silver ratio has stretched to nearly 90:1, well above its 20-year average of about 68:1. This deviation suggests that silver is undervalued and poised for a rapid catch-up run, with Lien recommending buying long-dated call options (LEAPs) on silver to capture the upside potential with limited defined risk.
Lien is tracking three key market signals in the coming weeks: the U.S. dollar index holding below 101, further cooling in the job market, and physical demand spikes in Asian markets. If these indicators align, this dip may be remembered as one of the best buying opportunities of the year.