Best of the Week
Most Popular
1.UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - Nadeem_Walayat
2.UK General Election 2015 Seats Forecast - Who Will Win? - - Nadeem_Walayat
3.Gold Price Downtrend Looks Set to Continue - Clive_Maund
4.Commodity Prices Set To Plunge Below 2008 Lows - Austin_Galt
5.New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - GoldCore
6.Gold and Silver Stocks or General Stock Market Indices? - Rambus_Chartology
7.“Forgive Us Our Debts” – Only Way To Prevent Economic Meltdown - GoldCore
8.UK House Prices Trend 2015 and the May General Election - Nadeem_Walayat
9.12 Reasons Why Barry Ritholtz and Many UK Experts Are Mistaken On Gold - GoldCore
10.Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - Mike_Shedlock
Last 5 days
Spock, Debt and the Kingdom of Denmark - 5th Mar 15
The Psychology of a Sideways Stock Market Trend - 5th Mar 15
Freedom from America - Getting Out Of Dodge - 5th Mar 15
What Top Hedge Fund Managers Really Think About Gold - 4th Mar 15
U.S. Dollar Strategic Backfire On U.S. Government Policy - 4th Mar 15
Canada’s Central Banks Orders End to ‘Spocking’ Of Canadian Dollar - Defacing Debasing Currencies - 4th Mar 15
Chicago's Only Possible Salvation: A Detroit-Like Bankruptcy - 4th Mar 15
Gold Price and Mining Stocks Decline Together - 3rd Mar 15
Financial Slaughter - The Silence of the Lambs - 3rd Mar 15
Bondholders “Bailed In” In Austria – New Banking Crisis? - 3rd Mar 15
How to Profit from the Coming Oil Price Crunch - 3rd Mar 15
Is Japan Zimbabwe? Could Japan go Hyperinflation? - 3rd Mar 15
Bill Gross Says Fed May Raise Rates 25 Basis Points in June - 3rd Mar 15
The Secret Behind My Hedge Fund Trade on U.S. Housing Market - 3rd Mar 15
BLS CPI Lie - How's That Dsflation Working Out for You? - 3rd Mar 15
Tesla Bonfire of the Money Printers’ Vanities - 3rd Mar 15
Gold Demand in UK, Europe and U.S. – Reuters Interview GoldCore - 2nd Mar 15
Watch the Skies... for Investor Profits - 2nd Mar 15
How Investors Can Identify the Best Small-Cap Stocks - 2nd Mar 15
Gold and Silver - What If the Precious Metal Stocks Bulls are Back - 2nd Mar 15
Students Getting a PhD in Subprime Debt - U.S. Debt Breaking Bad Part 3 - 2nd Mar 15
The Stock Market is in The Process of Major Top! - 2nd Mar 15
Stock Market Weakening Trend - 2nd Mar 15
Gold Price Glimmer of Hope - 1st Mar 15
Stock Markets Are Riding High on Thin Air - 1st Mar 15
Varoufakis vs. the Troika - Showdown in Athens - 1st Mar 15
Subprime Rising - U.S. Debt Breaking Bad Part 2 - 1st Mar 15
Gold CoT Improving, But ... - 1st Mar 15
UK General Election 2015 Seats Forecast - Who Will Win? - 28th Feb 15
UK General Election 2015 - Forecasting Seats for SNP, LIb-Dems, UKIP and Others - 28th Feb 15
Stocks Bull Market Continues - 28th Feb 15
U.S. Debt Breaking Bad - 28th Feb 15
NATO Frankenstein - When Centralization Scales Beyond Our Control - 28th Feb 15
Gold And Silver Insanity Prevails; Precious Metals Without Direction - 28th Feb 15
Fed Raising U.S. Interest Rates - Shovelin’ Schmitt Against the Tide - 28th Feb 15
Don't Let This Stock Market Myth Cost You Your Gains - 28th Feb 15
Recession is On The Way; Beat The Stock Market Crowd, Panic Now! - 28th Feb 15
Stock Market Indexes Creeping Towards the Edge - 28th Feb 15
GGD Going for Mexican Gold - 27th Feb 15
Foreign Real Estate Is the New Swiss Bank Account - 27th Feb 15
10 Reasons Washington Has War Fever - 27th Feb 15
Gold and the Euro Tragedy, Iraq 3.0, Ukraine Conflict Three Ring Circus - 27th Feb 15
Deepak Chopra - New Age Genius or Bullshit Expert? - Video - 27th Feb 15 - Videos
New Greece Drachma Revealed Amid Bank Runs - Greeks Buy Gold Sovereigns - 27th Feb 15
Will Month Long Stocks Rally Continue? - 27th Feb 15
The Only Public Hedge Fund You Should Own - 27th Feb 15
UK House Prices Trend 2015 and the May General Election - 27th Feb 15
Why America is Ungovernable - The Republicans’ Civil War - 27th Feb 15
Gold vs Gold Stocks: Bullish Anomaly Developing? - 27th Feb 15
I Heart Capitalism, Nasdaq Stocks, Then And Now - 27th Feb 15
The Fed’s History of Assassination - 27th Feb 15 i
Gold Bull Market Forecast - Money Will Rotate Into These Dead Investments - 27th Feb 15
"Audit the Fed"? We've Already Done That (Well, Kind of) - 26th Feb 15
Forget Peak Oil; Worry About Peak Demand - 26th Feb 15
Currency Wars, Again - 26th Feb 15
The Fed Waited Too Long: Here Comes Inflation - 26th Feb 15
Investing Inertia Won’t Keep Your Cash Safe - 26th Feb 15
The Net Neutrality Scam - 26th Feb 15
Will Conservatives Out of Control Immigration Crisis Boost UKIP Election 2015 Prospects? - 26th Feb 15
EU Warns Ireland and Euro Zone of Debt Dangers - 26th Feb 15
Commodity Prices Set To Plunge Below 2008 Lows - 26th Feb 15
Ukraine Hyperinflation as Currency Plunges 44% in One Week! - 26th Feb 15
The State of the Global Markets 2015 - 53 Page Report - 26th Feb 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

The State of the Global Markets 2015

Why Silver Price will Soar to $250 an Ounce

Commodities / Gold and Silver 2013 Apr 25, 2013 - 01:46 PM GMT

By: Money_Morning

Commodities

Peter Krauth writes: All bull markets go through periods of consolidations and corrections. And precious metals are no exception.

There has been plenty about gold's swan dive, but less talk about silver. And at this point there's more potential for silver than gold...significantly more.


Because the global silver market is relatively small, silver prices tend to be more volatile; the pounding selloff we witnessed in silver this past month is a testament to that fact. But volatility works both ways, so when silver rises, its price can explode higher.

That's exactly what happened in April 2011, when silver prices rose by 170% in the space of just 7 months. That's why silver investors say investing in silver is like buying "gold on steroids."

And right now, it looks like the silver market is on the cusp of doing the same thing all over again. According to our research, the next stop could be $40 by year's end, and $60 by the end of 2014. And much higher after that.

Here are five key factors that will drive silver higher - significantly higher - in coming years.

Silver Driver No. 1: Relentless Buying of Physical Silver
Despite the drubbing that silver took in mid-April, there's one fact that most observers are ignoring: the physical silver market.

While gold and silver prices took a pounding, silver investors were not running to unload their silver -- quite the opposite. In fact, savvy investors were flocking to buy physical silver.

Even as silver prices dropped, buyers stepped up, and supply became so scarce, premiums nearly quintupled from 8% to 37% above spot prices. And that's if you could even get your hands on it. Essentially, no one was selling, yet a lot of buyers recognized that silver was "on sale" and decided to stock up.

In the first three months of 2013, the U.S. Mint sold more than 15 million American Silver Eagle bullion coins. That's the first time ever the Mint has sold this many coins so early in the year, setting a record in the 27-year history of the series.

Coin dealers across the U.S. have been regularly selling out of their inventories, desperate to get new allocations.

With investors buying 56 times more physical silver than physical gold, Main Street is setting the pace, while Wall Street is oblivious to the trend.

Silver Driver No. 2: Silver ETFs Are Bulking Up
As savvy retail investors have been soaking up physical silver, so have the silver exchange traded funds (ETFs).

In the first quarter of 2013, over 140 tons of gold was sold by physically backed gold ETFs. But remarkably, silver ETFs bucked that trend.

In that same slice of time, the world's silver ETFs actually added 20 million ounces to their vaults. That's nearly $600 million worth of silver being bought within just three months, all while silver prices were steadily declining.

Now, silver ETF shareholders are a combination of both retail and institutional investors. But 20 million ounces flowing in is a clear sign of recognizing value and steady hands.

This kind of action is especially revealing. It signals that once an ounce of physical silver is bought, its owners have "sticky" hands, and they are very reluctant to sell.

Silver Driver No. 3: Sentiment is So Bearish, It's Time To Buy
Investor sentiment is often a great indicator - a great contrarian indicator, that is.

That's because the herd usually does the right thing at exactly the wrong time. It's what we call the Dumb Money.

Silver contracts are traded on futures exchanges. And one of the most useful gauges of investor sentiment is something called the Commitment of Traders Report (COT), produced weekly by the Commodity Futures Trading Commission.

When the speculators' (dumb money) net short silver positions reach a major high, it's nearly always a perfect contrarian signal. That's typically when the silver price is either at or very near a major low.

And it's exactly how things played out in 1997, 2000, 2001, and 2005. Each and every one of those instances marked exact or near-term lows from which silver prices either quickly shot higher, or began an extended rally.

In the weeks surrounding the April silver price selloff, silver short positions reached their highest levels in nearly 20 years. That's an extremely bullish indicator for higher silver prices ahead.

Silver Driver No. 4: Obama's Back, And He's Good for Silver
The president has been very good for silver prices. In fact, he was so good, he helped make silver the best-performing major financial asset during his first term.

Now that Obama has sealed another four years, and Federal Reserve Chairman Ben Bernanke's still in place and relying heavily on the printing press, I'm fully expecting a repeat performance. Thanks, guys, for more of the same.


Silver Driver No. 5: Insurance Against Government Theft
Back in 1933, President Roosevelt seized privately held gold by signing into law Executive Order 6102.

FDR's official motive was to "provide relief in the existing national emergency in banking, and for other purposes..."

That single act criminalized the "hoarding" of gold by the public, giving people less than a month to turn in their gold.

Fast forward to 2013, and 80 years have gone by. Today, the 1933 gold confiscation is no longer common knowledge. But students of history realize the risk of a similar threat surfacing again.

Interestingly, silver was not targeted by Executive Order 6102. Now, we can't know if there will ever again be anything akin to this Oval Office edict - much less what it might cover and might say.

But going on the past, and considering the size of the silver market relative to gold, silver could be a way to own a precious metal that just might sidestep any risk of future confiscation.

Silver is much less widely owned than gold, and that could help keep it off the official radar.

Where will silver ultimately peak?
The bull market in silver is far from over. Given how silver has reacted after a strong selloff in the past, we could easily see the precious metal regain the $40 level by year's end. And in 2014, $60 silver is looking very attainable.

If the 1970s bull market in silver is any indication, we could see silver reach $125 by the time this bull market finally peaks.

But this time around, if the fundamental drivers are so entrenched, and global demand is so powerful, we could actually see silver at double that level, finally reaching $250 per ounce.

Needless to say, I've been following this story for a while and in Real Asset Returns I keep my readers ahead of all the risks and opportunities in precious metals, the miners and the various instruments that you can use to make the most out of your strategic metals positions. And they've profited mightily from it.

But there's a lot more upside to come.

And we're not the only ones thinking silver has much, much higher to go.

Eric Sprott, the billionaire Canadian resource guru, recently said:

"I think silver will be the investment of this decade whereas gold was the investment of the last decade. Silver will outperform gold. I believe silver will trade down 16:1 ratio to gold...Your return will be 300% more. If you have the patience and can stomach the volatility, I think silver will by far be the better investment going forward."

Source :http://moneymorning.com/2013/04/25/5-factors-that-will-push-silver-to-250-an-ounce/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2015 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

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

Free Report - Financial Markets 2014