Top 10 silver price predictions for 2013

Where have all the silver bulls gone? Price predictions for the white metal are all over the board in 2013.

Posted by Alejandro Guillú Mendoza.

Many people around the world want to know the answer to the question, “Where is silver going?”

I invested several hours browsing the Internet searching for answers to save you time and money (because time is money, after all). Have another financial question? Drop me a line. Please don’t ask me where your lost kitten is or why she left you. Ask me about topics that can make you money, like silver!

Here are my findings on the latest silver price predictions for 2013, 2014 and beyond. The prices are sorted from low to high:

1) $26 Barclays according to CommodityOnline

Barclays believes strong production growth in mining will knock silver prices down and keep them low in 2013. “We expect it to grow to 25.2kt in 2013, with the slowdown in output from Australia and Europe being offset by strong growth across South America and Asia. We expect modest growth from the major producers, with Mexico retaining its pole position.”

2) $30-$32 Neil Meader (Head of Precious Metals Research and Forecast) according to Forbes

“For the moment, we would expect to see a continuation of the price volatility that we’ve seen of late.

“The unknown for the longer term is inflation.”

“It would be wrong to assume that a year-on-year price fall automatically presages an end to the multi-year rally; that occurred in 2009 and yet prices (based on the annual average) then more than doubled in just two years.”

3) $31 Deutsche Bank

The bank lowered its forecast last month 16.5% to $31 according to Fox because the demand for stocks over commodities is rising and the growth in the United States of America is improving. The 2014 forecast was also significantly reduced.

Excluding major banks currently in the red. Deutsche Bank is the fifth least profitable major bank in the world with barely $400 million in profits. It appears they are no longer qualified to give financial advice to anybody. Perhaps they should hire me. I can easily turn a profit of $40 million. I am just a regular guy. They have 100,000 employees.

4) $33 HSBC

The bank increased its target for silver from $32 based on four factors driving prices higher: industrial demand, investor appetite, strong coin and bar purchases and a bottoming out of jewelry demand according to the Wall Street Journal.

“Greater industrial silver consumption is one of the most compelling arguments in favor of higher prices.”

5) $34.10 BNP Paribas

The bank reduced its silver 2013 forecast a few months ago to $34.10 from $39.05 according to Reuters.

6) $35 Morgan Stanley

Morgan Stanley is very bullish on silver and selected the precious metal as one of the Top Picks for 2013 according to BusinessWeek.

“Gold, silver and corn will outperform other raw materials next year as a weaker dollar and rising investor demand bolster precious metals while supply curbs aid grains.”

7) $38 Commerzbank according to the Wall Street Journal

Silver is “establishing itself as a precious metal with an industrial character, setting itself significantly apart from gold.”

8) $40.25 Michel O’Brien

Silver To Gain 29% in 2013 – Analysts, Traders and Investors.

“The silver market remains a very small market and this continuing global investment and store of value demand should lead to silver reaching a real record high, inflation adjusted, of over $140/oz in the coming years.”

9) $50-$60 Ge Christenson according to SilverSeek

“This is not a prediction based on wishful thinking and hope, but a best estimate based on rational analysis of data stretching back to 1975.”

“Silver (and gold) will continue to rise, doubling every 3 – 4 years, until our government manages to tame the deficits, the borrowing, and the inevitable inflation.”

10) $91 Equity Management Academy

Silver Doctors started recently in 2011 and they are visited by over 750,000 each month. The video analysis by Steve Roy is only 9 minutes long.

This was the highest forecast I could find at the time of this writing – a time when, admittedly, silver prices are extremely low. It’ll be interesting to see which of the predictions above come the closest to the truth by the end of the year.

How to buy silver coins cheaply

From buying in bulk to using special online search services, you can probably find silver coins cheaper than you thought online.

1) Buy in bulk. If you want to get the best possible price on silver bullion coins, consider stashing your cash, waiting for a pull-back in prices and buying a bulk lot. Some web sites offer reduced pricing for bulk silver coin purchases. In the image below, I’ve taken a sample of GoldSilver.com‘s bulk pricing rates for Silver American Eagles as of Sept. 6, 2001:

As you can see above, if you purchase 10,000 silver American Eagles, you stand to save more than $20,000. Not bad! If you don’t have the cash to buy silver coins in bulk, consider partnering up with friends or family to place a larger order than you could on your own.

2) Buy direct from third-party sellers. eBay and Amazon have become two of the most popular places for consumers to sell silver coins directly to other consumers. Prices can be hit-or-miss depending on who’s selling when. As of this writing, for instance, Amazon sellers have listed silver American Eagles for as low as $50. That’s pretty high compared to some specialty online coin vendors, so you’ll want to check Amazon and eBay frequently. When sellers list coins at low prices, they get snatched up quickly.

3) Roam your local flea market. While it’s hit-or-miss, you might come across great deals at garage sales, community sales and flea markets. Most flea markets have specialty coin booths that are set up year-round, but you’ll probably find better deals if you stumble across an individual who just happened to set up for the weekend and has a coin or two to sell (along with a whole lot of junk from his or her garage). For most investors, this approach isn’t worth the effort, but if you’re already at a sale, it doesn’t hurt to keep your eyes open. If you stumble across a silver coin you’d like to buy, don’t be afraid to haggle.

4) Do a search on Google Products. I’m always surprised at the number of people who don’t know about or use Google Product Search when doing comparison shopping. The service lets you type in a keyword (like “Silver American Eagle 1 Oz. Coins”), and it’ll show you list prices for that product from vendors around the Internet. It’s a great place to find sellers you might not have otherwise discovered.

Related

FALSE GODS


Eleven reasons to AVOID investing in Dow Jones Industrial Average stocks


METAL SEDUCTION


Why invest in gold?


TOO LITTLE, TOO LATE?


3 reasons NOT to invest in the MobiTV IPO


BUY WHEN THERE’S BLOOD IN THE STREETS


Time to buy Silvercorp Metals (SVM)?


FIGHT BACK


How to resist the new world order


ANOTHER BOON FOR PRECIOUS METALS?


QE3 is coming soon to an economy near you


Gold and silver all-time record highs (INFOGRAPHIC)

See how high gold and silver prices need to climb to beat their all-time record highs when adjusted for inflation.

Gold broke it’s 1980 all-time record high of $875 an ounce in 2008. The yellow metal’s now trading north of $1,500 an ounce. Silver surged to a brand new all-time record high of $49.45 an ounce on April 28, 2011. While the “nominal” or “face value” record highs for the metals have been broken, gold and silver are still trading well below their all-time record highs when adjusted for inflation. Check out the infographic below to see how far gold and silver are from their inflation-adjusted highs:

Copy and paste the code below to embed this graphic on your site!

Source: Wall Street Journal.

Related

BLIND LEADING THE BLIND


Why has the media gotten silver price forecasts so wrong?


GOLD’S TURN TO SHINE?


Gold silver ratio pointing to higher gold prices?


SOCIAL NETWORKING WAR HEATS UP IN CHINA


RenRen IPO’s biggest hurdle might be PengYou


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


SLOWING DOWN THE SILVER SURGE


New silver margin requirements go into effect

THE FACEBOOK OF CHINA?


3 MORE reasons to invest in the RenRen IPO

U.S. Mint rationing silver American Eagle coins… again

SilverCoinsToday.com has suspected that silver coin rationing has been going on since February. Now, it’s official.

Spiking demand for silver American Eagles has forced the U.S. Mint to ration sales of the bullion coins … again. Via a special allocation program announced last week (per ChristianPost.com), the Mint will restrict the number of Silver Proof coins authorized purchasers can buy.

Similar allocation measures have been implemented off and on since 2009 as the Mint struggles to meet demand. This comes despite a law mandating coin production “in quantities and qualities that the Secretary determines are sufficient to meet public demand.”

Extraordinary times call for extraordinary measures.

SilverCoinsToday.com, in fact, has suspected that silver coin rationing has tacitly been going on since February.

“In January this year Authorized Purchasers were buying 2011 Silver Eagles nearly every day,” the site reports, “but by March that sales trend changed. Daily sales updates became less frequent and weekly sales increases were capped at or very close to the 700,000 level after the week ending March 4.”

That could explain why we haven’t seen record-breaking sales numbers for the coins since the start of the year. In fact, January 2011 saw the most American Silver Eagle sales in history with the Mint offloading 6,422,000 of the coins, according to SilverCoinsToday.com. The next closest month came in November of 2010 when 4,260,000 American Eagles were sold.

Silver prices have risen more than 40 percent since the start of the year. That’s on top of a more than 80 percent gain in 2010. At some point, those high prices could start eating into demand for silver bullion coins, but for now, at least, it looks like the eagles are still flying high.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


MINING INDUSTRY SHAKEUPS IMMINENT?


Silver Wheaton predicts mining deals once silver prices stabilize (SLW)


SILVER EYING $50/OUNCE


Silver just five trading days away from all-time record high price


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


PUT YOUR MONEY WHERE YOUR MOUTH IS


How to invest in food stocks

NO MORE CHEAP CASH


What happens when QE2 ends in June?

Silver Thursday, the Hunt Brothers, and the collapse of a precious metal

On a single day in March of 1980, silver prices fell more than 30 percent. Now known as Silver Thursday, could the same thing happen today?

After bottoming around $27 an ounce in January of this year, the price of silver has roared up 60 percent to $43.05. The see-saw trading has me looking back on one of the worst trading days in history of silver. It’s a day so infamous it has its own name: Silver Thursday.

On a single day of trading in 1980, the price of silver plunged from $15.80 to $10.80 – a decline of more than 31 percent! Those are the sort of moves that can wipe out a brokerage or Forex account in the blink of an eye. What exactly caused Silver Thursday and are we vulnerable to such declines again?

The Causes of Silver Thursday

Convinced that the United States’ loose monetary policies were going to lead to inflation, Herbert and Nelson Hunt – the sons of a wealthy oil tycoon – were convinced paper currencies would soon give way to metals-backed paper. In particular, they thought silver was grossly undervalued, so they set about accumulating it – lots and lots of it. Throughout the 1970s, they gathered up $4.5 billion of silver in bullion and futures contracts. By some accounts, that was fully one third of the world’s entire supply of silver (excluding silver held by governments, which rarely enters the free market).

The situation was so dire that Tiffany & Co. took out an ad in the New York Times in March of 1980: “We think it is unconscionable for anyone to hoard several billion, yes billion, dollars worth of silver and thus drive the price up so high that others must pay artificially high prices for articles made of silver from baby spoons to tea sets, as well as photographic film and other products” (per Time magazine).

Tiffany was responding to what – by all accounts – was one of the most violent upswings in commodities prices in history. In 1979, silver bullion prices rose from $6 an ounce to a high of $48.70 – a gain of more than 700 percent in a year.

Silver Thursday and the Hunt Brothers

Tiffany was just one of the Hunt brothers’ enemies. The U.S. government smelled a secret attempt at cornering the market in silver (though the Hunts would always deny that was their goal). On Jan. 7, 1980, commodities regulators were given the go-ahead to halt the creation of new long positions in silver futures.

Shorts started piling into the trade and the price of silver began to fall. Because the Hunts were heavily invested in silver on margin, falling prices led to a series of a margin calls in their trading account. The Hunts met these diligently through March.

With little respite from falling silver prices, though, it was inevitable that the time would come when the Hunts could no longer meet a margin call. That fateful day came on March 27, 1980 – what we now know as Silver Thursday. Rumors surfaced that morning that the Hunts had a one-billion-dollar margin call they couldn’t meet. The truth was, they had a $100 million margin call. The actual dollar amount mattered little. Full-scale panic hit the pit and commodities markets.

Failing to meet a margin call is failing to meet a margin call, and the Hunt name was besmirched. No one would lend the brothers money to meet the call, and the price of silver plunged from $15.80 to $10.80, according to 24HGold.com. Other stocks and commodities sold off, too (though they would quickly recover), as traders feared an all-out collapse of some of the country’s largest financial institutions. Silver Thursday had arrived, and the Hunt fortune would never be the same again.

Indeed, it took nearly 10 years after Silver Thursday for the Hunt brothers to unwind all their silver positions. And the price of silver hasn’t come close to touching those highs in more than three decades – until now that is.

Will we see a repeat of Silver Thursday?

As I wrote yesterday, we’re just five trading days away from beating the all-time record high price for silver set in January of 1980. If current price trends for the metal continue, we could easily see $50 silver by June.

What are the odds we’ll see a repeat of Silver Thursday? The fact is, no one knows, but we do know this: silver’s more volatile than gold. Whatever happens to the yellow metal will be amplified in the price of silver. And right now, the primary driver for both metals is the ever-growing threat of inflation.

So long as that threat continues to grow, we’ll likely see higher silver prices. No one can say they won’t be another Silver Thursday, though. If the Fed signals that it’s planning to raise interest rates or end QE2 early watch out. It might not be the end of the bull market for metals, but it could be the start of a powerful correction.

Nimble traders can make money either way. At least one investor made out big on Silver Thursday the first time around. According to 24HGold.com, Occidental Petroleum’s chairman, Armand Hammer, made $119 million shorting silver. Don’t expect to see a similar collapse anytime soon, but don’t deny that it can’t happen. It did on March 27, 1980, and that days contains lessons for us all.

Related

A RECORD DESTINED TO FALL?


Silver just five trading days away from all-time record high price


MINING INDUSTRY SHAKEUPS IMMINENT?


Silver Wheaton predicts mining deals once silver prices stabilize (SLW)


SILVER SHEEN


Silver price record could fall in 2011


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


HOW TO SECRETLY STEAL A COAL COMPANY


The Puda Coal stock collapse: what happened? (NYSE:PUDA)

FROM WOOD CHIPS TO GAS TANKS


3 reasons to invest in biofuel’s KiOR IPO

Silver just five trading days away from all-time record high price

We’re just 14.87 percent away from the all-time record high price for silver. Prices have only been higher for five trading days in all of modern history.

There’s something unusual afoot in the silver bullion market. The metal’s up more than 11 percent in two weeks of trading. Silver spot prices ended the weekend at $43.05. That’s just $6.40 off silver’s all-time record high $49.45 that was set in 1980.

More incredible still is the fact that silver prices have only traded higher than $43.05 for five trading days in all of modern history! That’s according to Matt Turner at Mitsubishi. Those days came in January 1980 when the Hunt Brothers’ hoarding, rampant inflation and surging fuel prices all conspired to push silver prices into the stratosphere.

The fact that silver could punch its way past $49.45 in just five days of trading is scary. From today’s price, that would be a gain of 14.87 percent. It could take a year to get there, or it could take 120 hours. Protect yourself with stops, and enjoy the ride!

If silver is indeed going to surge through its all-time record highs, we’ve got to be aware of the fact that it could do so quickly. Remember, too, that silver prices can fall just as quickly as they can rise. On perhaps the most infamous day in silver trading history – Silver Thursday – prices for the metal fell more than 31 percent in a single day of trading as rumors of the Hunt Brothers’ billion-dollar margin call circulated in the pit. The Hunts aren’t around anymore, but there are still sharks out there.

If QE2 comes to an early close, for instance, or the Fed announces a rise in interest rates, silver prices will likely plummet. The decline won’t necessarily last, but you’ll want to make sure you’ve got enough elasticity in your account to handle the lows and the highs. Those who do, stand to make a lot of money in the months to come.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


MINING INDUSTRY SHAKEUPS IMMINENT?


Silver Wheaton predicts mining deals once silver prices stabilize (SLW)


SILVER SHEEN


Silver price record could fall in 2011


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


THE ULTIMATE TOXIC ASSET?


Not everyone’s bearish on uranium mining stocks in 2011

PRECIOUS ETFS


Top 10 best gold and silver ETF funds

Utah gold standard takes pot shot at the Federal Reserve

Utah’s new gold standard bill takes a symbolic jab at the Fed. And it’s a jab that’s representative of the pent up anger over the federal government’s fiscal irresponsibility.

Utah just got a lot of street cred by firing the first bullet in the war against the Federal Reserve’s loose monetary policies. The state’s Governor Gary Herbert signed a bill into law last month that recognizes gold and silver coins issued by the U.S. Mint as legal tender in the state.

Unfortunately, the bill doesn’t go so far as letting you exchange gold and silver for goods and services based on the value of the underlying metal. Instead, Utah residents would have to use face value on the coins to purchase goods and services. That means people probably won’t be using Eagles to pay their mortgages or car payments (since the face value is far less than market value), but nonetheless it’s a symbolic jab at the Fed. And it’s a jab that’s representative of the pent up anger out there.

It’s not just Main Street that’s upset about government spending; it’s state governments, businesses and voters, too. And there are few voices speaking more loudly against rampant inflation than Texas Congressman Ron Paul.

“The gold standard would keep you from printing money and destroying the middle class,” Paul says. “Every country where you have runaway inflation, there’s no middle class. Mexico, there’s no middle class, you have a huge poor class, and a lot of wealthy people. Today we have a growing poor class, and we have more billionaires than ever before. So we’re moving into third world status.”

While Utah’s bill stops short of recognizing all forms of gold and silver as currency, it does contain a nice tax benefit. Utah investors who buy and sell gold and silver coins for investment purposes no longer have to pay state capital gains taxes on the metal.

A number of other states appear to be following Utah’s lead by introducing their own gold and silver currency bills. Georgia and Iowa have put forth legislation that would mandate state taxes be paid in gold and silver, according to MotherJones. Indeed, more than a dozen states have floated or are in the process of debating alternative currency bills.

It’s a step in the right direction, but I’m still not convinced we’ll start seeing progress until banks are allowed to issue gold- and silver-backed debit cards that can electronically exchange bullion for U.S. dollars at checkout terminals.

I wrote about just such a scheme recently in my post How would a gold standard work in the 21st Century? It’s Utopian thinking right now, but if the government can’t rein in spending before we’re subject to runaway inflation, I suspect I wouldn’t be the only one who would sign up for a gold- or silver-backed debit card.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


RISING TIDE


15 gold price predictions for 2011


SILVER SHEEN


Silver price record could fall in 2011


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


HOW LOW WILL IT GO?


Gold-silver ratio crumbles to 28-year low

THE OTHER FACEBOOK


Five reasons to invest in the RenRen.com IPO

Gold-silver ratio crumbles to 28-year low

The gold:silver ratio has traded in a range between 42 and 85 for 15 years. There’s a dramatic change in that historic ratio, though, and it’s happening right now.

With silver trading at its highest prices in 31 years, the gold:silver ratio is tumbling rapidly. On Friday, the gold:silver ratio hit its lowest level in 28 years near 35. A growing number of uncertainties in financial markets have investors piling into precious metals as no one’s quite sure when the next big shoe is going to drop.

“I’d say that from a macro/fear standpoint this is most like 2008 only its not the banking system that’s blowing up (that was around Bear Sterns time) it is the Sovereign debt, the US dollar and the Arab world that are on fire,” MontyHigh writes at WorldofWallStreet. “I would say the current chart’s eight in-a-row white candles looks a lot like the beginning of 2008’s ten-in-a-row white candle run leading up to its parabolic peak.”

Back in 2008, silver rose more than 24 percent in a month, only to plateau then take a huge 16 percent plunge in a single day of trading. That sobering fact should keep investors on their toes. But there may be more to it then just a manic buying spree.

Institutional investors have long been calling for a parabolic rise in silver that will close the large gap in the gold:silver ratio. Back in February, Eric Sprott of Sprott Asset Management was calling for the gold:silver ratio to hit 16 in the not-so-distant future – a level that would likely see silver upwards of $80 an ounce.

In an interview last week, Sprott called silver “the investment of the decade.”

“I’ve always thought that silver would move quickly to $50, and it would move to $50 this year – I thought it would get to $50 before year end,” Sprott told MineWeb. “If you ask me in the three to five year time frame, obviously I think it’s going to go north of $100 simply because we’ll get that 16:1 ratio.

“Silver is the investment of this decade as gold was the investment of the last decade,” he says. “So we’re sitting back waiting for things to evolve here.”

The gold:silver ratio has traded in a range between 42 and 85 for 15 years. Sprott chalks up today’s ratio change to industrial demand for solar panels and other high-tech industries. But changes of this scale and at this speed are unprecedented. There are obviously other factors at work – things like fear and greed. Even more than that, though, the spike in silver prices indicates just how tenuous the global markets have become.

Unlike in 2008, investors don’t feel comfortable crawling into a cave with dollar bills in their hands as the dollar itself is under assault by the loose monetary policies at the Fed. Silver has become the investment du jour. It could just as quickly become the short du jour, but silver’s showing no signs of weakness in early trading this week.

I agree with MontyHigh when he says it’s looking a lot like 2008 right now. The difference is there are few places to turn outside of gold and silver. If that other shoe drops soon, the markets are going to be in for a lot of pain. And I won’t even predict where the gold:silver ratio could end up. I do know, though, that I wouldn’t want to be holding dollars this time around.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


RISING TIDE


15 gold price predictions for 2011


SILVER SHEEN


Silver price record could fall in 2011


ARTIFICIAL MARKETS


Silver market manipulation can’t be ruled out


HOW HIGH WILL IT CLIMB?


Projected silver price for 2011? $50+ per ounce

PRECIOUS ETFS


Top 10 best gold and silver ETF funds

The case for ever high silver price forecasts

Since the start of serious unrest in Egypt, silver has spiked 37 percent. And yet, the price outlook for the precious metal still looks bright. Here are three reasons to resist the urge to sell your stash.

There’s an element of disbelief and second-guessing that creeps in when your investment decisions start paying off. Since the start of serious unrest in Egypt on Jan. 28 (just over two months ago), silver has spiked 37 percent. And yet, the price outlook for the precious metal still looks bright. Here are three reasons to resist the urge to sell your stash:

1) Reckless borrowing. Even if the Fed throws in the towel on QE2 in June as planned, the government’s proposed $3.7 trillion budget for 2012 could double the national debt to $23 trillion by 2021, according to Scott Silva of The Gold Speculator. Already, the U.S. national debt stands at $14 trillion – a figure that’s on par with the country’s GDP. If we can’t control spending in Washington, a Moody’s downgrade of U.S. sovereign debt won’t be far off.

2) Inflation rides in on a dark horse. I wince every time I hear Bernanke argue that “core inflation” remains tame. It’s spiked 3.9 percent over the past three months, and energy costs are up 28 percent over that same period, Silva writes. On top of that, the U.S. Dollar Index, which measures the dollar against a basket of foreign currencies, has fallen nearly 7 percent over the past year.

The Fed will soon be forced to tighten interest rates to rein in inflation. Such a move might be enough to strangle whatever recovery’s underway and push the economy into stagflation – what Silva calls an “eerie economic nether land of slow growth, declining wages, high unemployment and double digit inflation reminiscent of the Carter years.” When stagflation was at its worst, gold was at its best. Prices for the yellow metal surged as much as 526 percent during Carter’s first three years in office. The dramatic shift in the gold:silver ratio that’s underway now indicates silver could be the big beneficiary this time around.

3) Flight to safety. In September and October of 2008, the financial crisis claimed a number of storied investment banks, insurers and mortgage lenders from AIG to Wachovia. Stock prices, commodity prices, even the price of precious metals collapsed as the VIX surged and investors ducked for cover in cash. It’s unclear whether investors will be as comfortable holding dollars in the event of another market meltdown.

“It is believed that China is purchasing and storing large quantities of both gold and silver,” Mark Thomas writes at SeekingAlpha. “China’s objective is to make its currency the new reserve for the world, so it can diversify out of the consistently declining U.S. dollar.” China’s premier even went so far as calling the dollar’s status as the global reserve currency “a product of the past.” So long as the yuan remains pegged to the dollar, though, gold and silver remain the ultimate stores of value in a period of global currency debasement.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


RISING TIDE


15 gold price predictions for 2011


SILVER SHEEN


Silver price record could fall in 2011


ARTIFICIAL MARKETS


How much gold market manipulation do ETFs cause?


NO MORE SOFT TEES? :(


How can American Apparel avoid bankruptcy? (AMEX:APP)

PRECIOUS ETFS


Top 10 best gold and silver ETF funds

Silver price record could fall in 2011

Silver bullion is trading within 26 percent of its 1980 record high, and it isn’t a stretch to think the metal could break that record in 2011.

Silver hit an all-time record high price of $49.45 per ounce in 1980. Thirty-one years later, the metal’s logging multi-decade highs. Suddenly that 1980 high doesn’t look so preposterous. Silver spot prices rose as high as $39.25 in trading yesterday. That puts silver up more than 27 percent since the start of year, and it brings the metal within 26 percent of its 1980 record high.

Silver would have to log gains of 50+ percent this year to break its record price. That’s a big gain, but it’s far shy of last year’s 76 percent gain. The phenomenal run has been underpinned by inflationary fears, as investors dump paper currencies for finite physical commodities. Silver, too, has looked particularly attractive as the price of gold ($1,400+ per ounce) puts it out of reach for many individual investors.

March alone saw the price of silver up more than 11 percent with much of the demand coming from China. Not only is the growing middle class in China buying silver as a store of value, industrial demand for the metal has risen dramatically.

“We do see a lot of demand for silver from China, so we think silver used in solar panels have increased,” Natalie Robertson, commodities strategist at ANZ in Melbourne, tells Reuters. “We think China will have a lot of demand for silver in the medium to long term.”

Solar power is increasingly looking like the go-to renewable energy source as the world’s opinion on nuclear power sours. Because solar panels, which include small amounts of .9999 fine silver, are relatively quick to install, Japan itself is expected to turn to solar as it seeks to relieve pressure on the country’s power grid.

A number of noted analysts and investors have called for silver to break its 1980 highs by the end of 2011. As I wrote on Monday, Eric Sprott, the chief investment officer at Sprott Asset Management, has been particularly vocal. Sprott doesn’t rule out the possibility of $200 silver as part of what he sees as a correction in the off-balance silver:gold ratio. Putting money where his mouth is, Sprott’s got $1 billion or so of client capital and his own cash invested in the metal.

Related

ONE RATIO TO RULE THEM ALL


Sprott silver predictions calling for uncharted gold-silver ratio


RISING TIDE


15 gold price predictions for 2011


SILVER SHEEN


Three triggers that could push silver over $50 ounce


ARTIFICIAL MARKETS


How much gold market manipulation do ETFs cause?


NO MORE SOFT TEES? :(


How can American Apparel avoid bankruptcy? (AMEX:APP)

SOCIAL NETWORKING COMING TO AN OFFICE NEAR YOU


3 reasons to buy shares in a Jive IPO (Jive Software)