Silver has outshone gold this year with a spectacular 19% rise in price in April alone. Can silver continue its breathless run, or will it come crashing down?
Jim Rogers, renowned commodity bull who launched the Quantum Fund with George Soros, thinks silver prices will go higher.
"Silver has certainly gone up a lot in the last 9-10 months. There is no question about that, but remember, silver is still 10% below where it was 31 years ago," he said in an interview last week. "I bet you do not know many things that are 10% below where they were 31 years ago."
Despite the rally, the price of silver remains depressed, according to Rogers. "I prefer to look at the things that are still depressed. Natural gas is depressed compared to oil, silver is depressed compared to gold. I would rather look at the things within those sectors to see what are the things that are still depressed and see if, maybe, that is where we should be putting money."
Indeed, Rogers is shorting U.S. Treasuries as he believes they will collapse once the second tranche of quantitative easing (QE2) ends in June and the U.S. Federal Reserve comes back with QE3.
Despite his long-term bullishness, Rogers remains worried about the rapid rise in silver prices. "I own silver, but if it keeps going up, it could turn into a problem if it goes parabolic... I certainly hope silver goes down for a while. I say it as somebody who owns it because if it goes down, I hope I would buy more and if it goes up too much too fast, then I have to sell."
"I do not have any prices in my targets. If suddenly World War III breaks out, then I would not sell silver at $200 this year. So it depends on what's happening and what's causing this."
On April 28, price of silver touched a new 31-year high of $49.82 per ounce, just short of its $50.35 all-time record high in 1980, when brothers William Herbert and Nelson Bunker Hunt famously tried to 'corner the market'. (It did not turn out too well for the brothers as a U.S. court conspired to manipulate the price of silver. The metal had risen from $11 to $50.35, before a hard landing back to $11 soon after).
Silver has gained more than 145 per cent in the past year, and 19 per cent in April alone. On April 7, a GFMS-Silver Institute survey predicted the average price of silver at around $50. "2011 may well see silver reach or even exceed $50/oz, in part basis strong probability of gold peaking comfortably above $1,600/oz."
With silver on the verge of breaching new highs, many analysts are talking about a bubble in the market. It is the same naysayers who have been calling for a gold crash for years.
Certainly, silver does seem to have had a breathless run even compared to other metals:
Here are the key factors that could drive silver prices this year:
1. Fate of the U.S. economy. If the U.S. economy continues to falter and Federal Reserve returns with a third round of quantitative easing, U.S. dollar will fall further, leading to more investment plowing into gold and, as a spillover, into silver.
2. The gold:silver ratio has fallen sharply to 37:1 just recently, compared with an average of 62:1 in 2010. The gold/silver ratio is an important barometer for many commodity investors. If the ratio narrows, silver prices are seen to be doing better than gold prices.
When gold prices hit $850 in 1980 - the last time the price of silver was at this year's level - , the gold/silver ratio narrowed down to 17. The same ratio at these ratios, means silver could hit $80-$100, according to a range of analysts.
3. Like gold, silver is a hedge against inflation. Certainly the European Central Bank is worried and has recently raised interest rates to rein in inflation under its target of 2%. Inflation is already as issue in emerging markets and any sign of more easy money, especially from the U.S. Fed, will depreciate dollar strength. That, in turn, will raise oil and food prices, thus improving the case for commodity buying.
4. Silver is now the poor man's gold, as the high price of the yellow metal has made it difficult for many investors to get in.
5. But silver is also more prone to price volatility than gold. "Silver's traditional high price volatility and trading range are factors to consider: Already year-to-date $13 trading range ($26.68-$39.63) and average Q1 2011 price volatility 39.6% (gold 12.9%)," says GFMS.
"Investment will remain the main driver of the price. Silver's greater volatility in a smaller and less liquid market than gold is attractive to certain investors, with many now eyeing the all-time-high of $50/oz."
6. Suki Cooper, analyst with Barclays Capital, says silver prices could "see a sharper drop" than gold in the event of a precious metals sell-off, as a result of silver's "heavy bias towards retail demand... I think the real concern is if we see a slowdown in coin sales, or a slowdown in ETFs, the fundamental support for prices is much lower than where we are at the moment. I think we could see a much sharper correction in silver if investor interest starts to slow down across gold and silver."
"We think the industrial demand growth looks good, but not strong enough to drive prices where they are at the moment," she said. "We still have a market in a hefty surplus. So we think that support from the fundamentals is going to be much lower for silver in comparison to gold because in gold we've seen good physical demand materializing every time we've seen the price dip, providing a cushion for prices."
7. Demand for silver remains strong. GFMS says industrial demand in 2010 rose 20.7%, "a fraction shy of the pre-crisis record in 2008."
"Main drivers of the strong rise were continued robust emerging market economies growth, industrialized world's recovery from recession and pipeline restocking."
A significant boost in retail silver investment demand paved the way for higher investment in both physical bullion bars and in coins and medals in 2010. Physical bullion bars accounted for 55.6 Moz of the world investment total last year, says GFMS. "Increasing a hefty 47 percent last year to 178.0 Moz, implied net silver investment recorded its all-time high. Much of the increase was due to ETFs, the over-the-counter market, and investment in physical bars."8. World silver production rose by 2%, or 17.6 Moz last year, to a new record high of 735.9 Moz. Adding to supply are governments who have also been selling silver with Russia leading the way. Government sales estimated at 44.8 Moz in 2010, up by a massive 188% on the previous year's level.
However, the new trend could well be central banks buying gold, which could lead to another bout of silver buying as well.
9. However, many investment banks seem unimpressed by silver's rally. Goldman Sachs price for silver in the next 12 months is $28.2, almost half of its current price. Bank of America Merrill Lynch's silver price forecast for 2011 is $29.5.
UBS analyst Mark Bulsing says: "While further advances in the short run cannot be ruled out, we do not expect current levels to be sustained," adding that he saw prices returning to around $34 this year, even though there may be a spike to US$55."
Source : kitco.com
From the two charts above we can see that the prices are at a lower price from the peak. They have dropped last week and it will pick up soon. Those who have been waiting for the high prices of gold & silver to reduce to buy, this will be a good time to buy.
GOLD PRICES
At the point of writing, the gold price is at USD 1522.80/oz. For PG gold prices the price are as follows :
PG has introduced 10g gold bar last week, available for purchase. See the price movement every 20 minutes at the left hand side of this blog.
Do note that the peak of gold price is at USD1565.70/oz on 29th April, 2011
SILVER PRICES
Also, at the point of writing, the silver price is at USD 38.50/oz. Ratio of 39.55:1 to gold. For PG silver bars, the prices are as follows :-
The silver price peaks at around USD48.70/oz. The price now is 20% cheaper than the peak price. Why wait to buy? The silver price may not be any cheaper than today's price.
WHY YOU WANT TO BUY SILVER INSTEAD OF GOLD?
higher rate of return
easier to keep due to non-recognition of the silver bar
good for long term investment
usage of silver is higher
high ratio between gold & silver
WHY YOU WANT TO BUY GOLD INSTEAD OF SILVER?
easier to keep due to smaller in size
easier to get cash
lower spread
EQUAL BENEFITS OF BUYING BOTH GOLD AND SILVER BARS
easy to buy
easy to sell
higher rate of return compared to any other investment
minimum maintenance cost
you own them
Do not hesitate to buy gold bars & silver bars. The bars comes with Authentification & Certificate from Independent Assayer. BUY ONE NOW.
The article & video is created by Mike Maloney. Original source Below is the summary :-
Which investment vehicle would you prefer to hold in the instance of a bank holiday?
The threat of a possible worldwide, round-robin currency devaluation is very real. It is not hard for us to imagine a time, not too far off in the future, where sovereign and institutional banking debts reach crisis crescendos, so much so that bank holidays may be declared globally.
Imagine a period of time when brokerage and banking accounts are frozen, ATM's are not functioning, communications may even be disrupted.
A Brenton Woods-type II scenario would most probably come about with central bankers from around the world gathering and agreeing upon on a round-robin of currency debasements based upon debt to GDP levels, etc.
In such a scenario almost every fiat currency will lose against real monies like physical gold and silver bullion.
At the same time, equities or stock shares will simply stand frozen in their brokerage accounts getting devalued in their respective currencies. In such a scenario physical gold and silver bullion could multiple many times in price while shares of mining stocks and other traded companies are debased in value.
Bullion vs. Mining Stocks? -> Our Bottom Line
For us the risk/reward ratio of mining shares stands second to the low risk - high reward ratio and potential gains for silver and gold bullion either in our hands and or stored in private 3rd party segregated vault storage facilities.
We will simply continue to put our gold and silver money where our hands can access it, as we patiently wait for what we believe will be the greatest wealth transfer in history.
On March 31, 2011, In Big Picture, Gold, Markets, Silver, Smart Money Europe, Stocks, By Smart Money Europe For many times now, we have been analyzing the relationship between gold and silver. The price ratio of gold versus silver has been dropping in the last couple of years in favor of the white precious metal.
At the moment, the gold/silver ratio is trading below the “crucial” bandwidth of 40-to-50, currently hovering around 38x.
Since we are in a secular bull market for commodities in general, and precious metals specifically, the breakthrough marks the beginning of a new phase in the bull cycle. The gold/silver ratio could finally be on its way to our target of 16x, the historical bottom in the last century.
Taking into account our long term price target for gold of $5,000 per ounce, we should see a substantial upward acceleration in the silver price in the coming months and years.
By the way, our gold target of 5,000 was calculated back in 2005, when gold was trading around $500/ounce. We haven’t changed our target price for gold… but as the global crisis evolves futher, and Bernanke & Co keep on QE’ing, maybe we should review our model.
But that’s ‘food for thought’ for another time.
For now, lets stick to our 5,000-dollar-gold target. This will bring us silver prices of over $300 per ounce. From current levels, we are still looking for a tenfold increase in the price of silver!
When we talked about these kind of target prices for silver six years ago, when the metal was still trading below $10 per ounce, people would consider us cowboys. Nowadays, things are looking more realistic, but still investors can’t seem to grasp a three-digit silver price.
Well, we’ve got news for you: our TP of $300 for silver could turn out to be too conservative!
The latest research from Deutsche Bank shows that history has even a lower gold/silver ratio in store for us. Their research shows a ratio that averaged around 12x (hovering between 10x & 15x) during the Middle Ages. Furthermore, Newton fixed the gold/silver ratio to 15.5x from 1700 till 1873.
More research on our part led us to ancient Greece, where the existing gold versus silver mines varied between 10x and 13.5x.
The real price difference between both metals should vary between the available quantities in the earth’s crust. And that’s where things start to get tricky.
Scientists and geologists are very mixed in their conclusions, with some citing silver deposits over 20 times physical gold reserves, while others claim they are as low as 7x.
We think the lower end of these assumptions may be more useful as far as future silver prices are concerned, since silver is processed and consumed at a rapid pace — mainly due to the emerging markets giants China & India — while gold is being hoarded at the same speed.
If we take all the possible gold/silver ratio’s from the past, combined with the assumptions of the physical metals probably available on our planet today, then we could see the gold/silver ratio drop to 10x in the current bull cycle. This bring us to a silver price – still taking our target price for gold into consideration — of up to $500 per ounce and more! We won’t go there (for now), but it makes our current TP of $300 silver look less exaggerated, doesn’t it… stick to your guns, we still have a long way to go!
Would you like to take full advantage of the coming price explosion in silver? A mix of the right physical silver coins with a decent selection (junior) silver mining stocks will bring you maximum returns!
Chart of industrial demand for silver by country:
From the Silver Institute's latest report (PDF).
Breakdown of industrial demand by product, via BullionVault.com:
Cell phones used 404.35 tonnes of silver;
Computers consumed 684.29 tonnes;
Thick film PV consumed 1,461.90 tonnes;
Automobiles which used 1,119.75 tonnes;
Electrical and electronics demand for silver reached an all-time high of 7,555.21 tonnes;
Solar power demand in 2011 is expected to reach 2,177.29 tonnes, up 40% from 2010;
RFID tags in 2010 reached between 31 and 62 tonnes with a long way to go before reaching full market;
Water purification used 62 tonnes, and is set to grow to 74.65 tonnes;
Medical applications may grow strongly to reach 93.3 tonnes by 2015;
The use of nano-silver in goods packaging and hygiene combined would consume 124.4 tonnes of silver over the next five years.Silver is up nearly 2% today (4/4).
Other articles:-
TUESDAY, MARCH 29, 2011
Carta di atas saya temui di Facebook seorang rakan. Amat menarik kajian yang telah dibuat. Pada tahun 2002, 65 keping 1 Dinar diperlukan untuk menunaikan fardhu haji. Jumlah Dinar menurun kepada hanya 19 keping 1 Dinar untuk menunaikan ibadah haji pada tahun 2009. Dianggarkan hanya 10 keping 1 Dinar diperlukan untuk menunaikan haji pada tahun 2015. Menarik bukan? Apa rahsianya? Anda perlu menyimpan 1 Dinar sebulan mulai sekarang kerana pastinya kos menunaikan haji akan meningkat di masa hadapan. Di bawah dipamerkan harga emas semasa sekarang.
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