Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21
US House Prices Momentum Analysis - 20th Feb 21
The Most Important Chart in Housing Right Now - 20th Feb 21
Gold Is the Ultimate Reserve Asset - 20th Feb 21
Is That the S&P 500 And Gold Correction Finally? - 20th Feb 21
Technical Analysis of EUR/USD - 20th Feb 21
The Stock Market Big Picture - 19th Feb 21
Could Silver "Do a Palladium"? - 19th Feb 21
Three More Reasons We Love To Trade Options! - 19th Feb 21
Here’s What’s Eating Away at Gold - 19th Feb 21
Stock Market March Melt-Up Madness - 19th Feb 21
Land Rover Discovery Sport Extreme Ice and Snow vs Windscreen Wipers Test - 19th Feb 21
Real Reason Why Black and Asian BAME are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 19th Feb 21
New BNPL Regulations Leave Zilch Leading the Way - 19th Feb 21
Work From Home Inflationary House Prices BOOM! - 18th Feb 21
Why This "Excellent" Stock Market Indicator Should Be on Your Radar Screen Now - 18th Feb 21
The Commodity Cycle - 18th Feb 21
Silver Backwardation and Other Evidence of a Silver Supply Squeeze - 18th Feb 21
Why I’m Avoiding These “Bottle Rocket” Stocks Like GameStop - 18th Feb 21
S&P 500 Correction Delayed Again While Silver Runs - 18th Feb 21
Silver Prices Are About to Explode as Stars are Lining up Like Never Before! - 18th Feb 21
Cannabis, Alternative Agra, Mushrooms, and Cryptos – Everything ALT is HOT - 18th Feb 21
Crypto Mining Craze, How We Mined 6 Bitcoins with a PS4 Gaming Console - 18th Feb 21
Stock Market Trend Forecasts Analysis Review - 17th Feb 21
Vaccine Nationalism Is a Multilateral, Neocolonial Failure - 17th Feb 21
First year of a Stocks bull market, or End of a Bubble? - 17th Feb 21
5 Reasons Why People Prefer to Trade Options Over Stocks - 17th Feb 21
The Gold & Gold Stock Corrections Are Normal - 17th Feb 21
WARNING Oculus Quest 2 Update v25 BROKE My VR Headset! - 17th Feb 21
UK Covid-19 Parks PACKED During Lockdown Despite "Stay at Home" Message - Endcliffe Park Sheffield - 17th Feb 21
How to Invest in ETFs in the UK - 17th Feb 21
Real Reason Why Black and Asian Ethnic minorities are NOT Getting Vaccinated - NHS Covid-19 Vaccinations - 16th Feb 21
THE INFLATION MEGA-TREND QE4EVER! - 16th Feb 21
Gold / Silver: What This "Large Non-Confirmation" May Mean - 16th Feb 21
Major Optimism for Platinum, Silver, and Copper - 16th Feb 21
S&P 500 Correction Looming, Just as in Gold – Or Not? - 16th Feb 21
Stock Market Last pull-back before intermediate top? - 16th Feb 21
GAMESTOP MANIA BUBBLE BURSTS! Investing Newbs Pump and Dump Roller coaster Ride - 16th Feb 21
Thinking About Starting to Trade This Year? Here Are Some Things to Keep in Mind - 16th Feb 21
US House Prices Real Estate Trend Forecast Review - 15th Feb 21
Will Tesla Charge Gold With Energy? - 15th Feb 21
Feeling the Growing Heat and Tensions in Stocks? - 15th Feb 21
Morgan Stanley Warns Gasoline Industry Is About to Become Totally Worthless - 15th Feb 21
Debts Lift Gold - Precious Metal Prices Will Rise on a Deluge of Red Ink - 15th Feb 21
Platinum Begins Big Breakout Rally - 15th Feb 21
How to Change Car Battery Without Losing Power, Memory, Radio Code Settings - 15th Feb 21
Five reasons why a financial advisor can make a big difference to your small business - 15th Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Silver Price Could Double by Year End

Commodities / Gold and Silver 2012 Feb 19, 2012 - 08:54 AM GMT

By: Jason_Hamlin

Commodities

Best Financial Markets Analysis ArticleWere you cursing at your computer screen when silver nearly tripled during the short 9 months from September 2010 to May 2011? Silver at $20 seemed like an insurmountable threshold for quite some time. This caused many silver investors to give up just prior to the ascent, completely missing the ride towards $50. I believe silver is about to offer a similar ride. While it is unlikely to match the 180% advance mentioned above, look for silver to make new highs in the coming months, with the potential to double to $65 by year end.


Following the record gains in silver during late 2010 and early 2011, the metal crashed towards $25 and has since rebounded to around $33. Investor sentiment has crashed along with it. The threat of Euro nations defaulting, banks announcing they are, well, bankrupt, and a series of other factors have scared away many of the Johnny-come-lately silver bulls.

I think too many investors are underestimating the power of the central banks. While I agree they are running out of options, it seems that their ability to kick the can down the road has yet to expire. Given that the United States is heading into election season and President Obama is in full campaign mode, I expect the administration to pull out all stops in order to continue the illusion of economic prosperity a while longer. Every economic fire of consequence is being extinguished with fresh liquidity, more funny money or new legislation. In case you missed it, QE3 has been in full force for quite some time, albeit executed in a somewhat stealth manner.

The implications for silver (and gold to a lesser degree) are going to be incredibly bullish. Absent a deflationary sovereign default that spirals out of control and takes down major banks with it, stocks will continue to creep higher in volatile trade throughout the year. Once fear begins to subside, look for precious metals to come roaring back to new highs by mid-year. Whenever the next financial crisis finally hits, we are likely to witness a new injection of quantitative easing that is even stronger than what transpired in 2008.

Will a major debt default pull down gold, silver and mining stocks with it? Absolutely.

Will it last? Not likely.

Investors are a predictable bunch. They always overshoot on emotions in one direction or another. A rush for liquidity and the perceived “safety” of government bonds or U.S. dollars will be incredibly short-lived and viewed in retrospect as immensely short-sighted. Everyone that rushed for the door by dumping real assets will soon regret their folly. When the fear subsides and some semblance of rational thought returns, the realization of the worthlessness of government paper will be widespread and cause a mass exodus of fiat money.

So while it is prudent to hold a decent amount of cash in the short term, hoping to buy the irrational dip, the medium to long-term investor might consider buying silver aggressively at this juncture. In my view, commodity prices are either going to continue grinding higher throughout the remainder of the year, or there will be a short and steep dip, following by a resumption to new highs.

Either way, the silver price has a long way to go before reaching previous inflation-adjusted highs. It would need to climb to $150 to reach its 1980 high using officially-suppressed inflation statistics and closer to $300 using honest inflation statistics. Seeing as you can buy silver at around $33 today, the upside potential remains absolutely huge. Let’s take a look at the long-term chart to determine price targets for 2012 and 2013.

Charting back to the start of the silver bull market, we can see that silver remains firmly in its multi-year uptrend. Contrary to negative sentiment expressed by some analysts, there has been no significant chart damage or other action to suggest that the bull market has run its course. Silver recently bounced off the bottom line of its trend channel, which also corresponds roughly with the 100-day moving average. This line has provided support during every one of silver’s corrections over the past decade, with the exception of the 2008 financial crisis. I expect it to continue to provide support during the current correction/consolidation.

While we could see one more quick dip below $30, I think any talk of a decline to $25 or lower is now firmly off the table. Silver is currently facing resistance at the critical level of $35. If it breaks to the upside through this level, I believe silver will quickly climb to challenge the $50 mark once again and reach a high between $55 and $65 by year end. To the downside, I think the lowest silver will close out the year is around $31, in the event that short-term deflationary forces take hold. But as mentioned earlier, I think the central banks stand ready to do whatever is necessary in order to prevent such an outcome.

These projections are relatively conservative and based on the long-term trend trajectory. Any number of events could send silver parabolic in the blink of an eye. The silver market is tiny in relationship to the paper money market and if even a small percentage of those dollars decide to buy silver, demand will overwhelm supply and send prices into triple digits. I ultimately believe silver could reach $500, but the more important consideration is the value/purchasing power increase of silver. One thousand ounces of silver used to be able to buy a median-priced home in the United States and I believe one thousand ounces will once again achieve this same feat in the near future.

Some view silver as an inflation hedge or way to preserve purchasing power. I see it as a way to vastly increase purchasing power over the next several years, with the worse case scenario being wealth preservation. I’ll take that risk/reward scenario any day.

The fundamentals are very strong for silver at this juncture. The Obama administration just put forth a budget that will result in another annual deficit of over $1 Trillion, despite promising to cut the deficit to $650 billion. The ECB is bathing Euro banks in liquidity and the US Fed has literally guaranteed an inflationary environment until late 2014. These policies create ripe conditions for commodities overall and precious metals in particular to make new all-time highs.

With less above-ground investment-grade silver available than gold, the supply/demand situation can not persist much longer at such depressed prices. Physical silver demand is growing and confirming our bullish view, as Silver Eagle sales for January posted the second strongest month ever at 6.1 million ounces!

Lastly, silver is the best form of money to own in the event of a collapse in fiat currencies. It will be difficult to use a gold eagle for small purchases, but silver eagles and junk silver will be ideal to use in purchasing food and other goods when the U.S. dollar is no longer accepted. This makes silver attractive not only for the strong returns and ability to increase an investor’s purchasing power, but also as a valuable insurance policy should the current monetary system break down.

So don’t miss the train again this time around. While silver is currently in consolidation mode, this is not likely to last long. When the silver price finally takes off once again, there will be little notice or opportunity to jump aboard the speeding train. Silver remains severely undervalued in my estimation and I expect the price to skyrocket in the near future as it approaches new highs.

You need only have the courage to take the path less chosen, buy when others aren’t interested and sell when the herd is clamoring to buy silver at any premium. While the next financial crisis may begin with panic selling of precious metals, I believe it will quickly flip to panic buying at very high premiums to spot price. I want to be well-positioned before this occurs and also have some funds on the sidelines to relieve panic sellers of their gold and silver at discount prices. A sensible approach that I advocate is to purchase in tranches, building a position now and adding to it every month or two. This will help to ensure that you don’t go “all in” at a short-term top and have funds available to take advantage of any major dip. Attempting to time the absolute bottom is nearly impossible, so I view this a opportune moments to establish or increase positions in silver.

I am currently adding to my positions, both in physical silver and undervalued silver mining stocks. The equities underperformed significantly last year, but against the backdrop of unlimited central bank easing and liquidity, I think we are likely to see a return to the leverage offered during the early stages of this bull market. Junior mining stocks in particular appear very undervalued at this juncture and could offer staggering gains if my analysis is correct. If you would like to receive the GSB Contrarian Report, download my guide to buying and storing physical precious metals and view all of the stocks that we hold in the Gold Stock Bull portfolio, click here to become a Premium Member.

By Jason Hamlin

http://www.goldstockbull.com/

Jason Hamlin is the founder of Gold Stock Bull and publishes a monthly contrarian newsletter that contains in-depth research into the markets with a focus on finding undervalued gold and silver mining companies. The Premium Membership includes the newsletter, real-time access to the model portfolio and email trade alerts whenever Jason is buying or selling. You can try it for just $35/month by clicking here.

Copyright © 2012 Gold Stock Bull - All Rights Reserved

All ideas, opinions, and/or forecasts, expressed or implied herein, are for informational purposes only and should not be construed as a recommendation to invest, trade, and/or speculate in the markets. Any investments, trades, and/or speculations made in light of the ideas, opinions, and/or forecasts, expressed or implied herein, are committed at your own risk, financial or otherwise. The information on this site has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs. Accordingly, investors should not act on any information on this site without obtaining specific advice from their financial advisor. Past performance is no guarantee of future results.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Comments

abrash zaki
09 May 12, 11:35
silver buyer

it will spark as he mentioned ....silver has more power than gold while pick up and down,....now itz the turn of silver to go upppppppppp


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules