2009 To See Gold at $1,500 per Ounce, Silver $25
Source: Commodity Online (3/10/09)
"In Europe, Germany in particular, everyone is trying to buy silver bars and coins, rather than gold. . ."
Speaking at the Prospectors and Developers of Canada Association (PDAC) annual convention, German investment fund manager Oliver Frank told media persons that silver will likely end the year in the $25 per ounce. This bold projection is almost double current silver prices.
The reason for this unprecedented surge is a late surge in pent-up buying demand, particularly among Europeans.
Frank, CEO of the Butzbach-based investment fund Silver Capital AG, said the heightened global investment demand will also help gold to breach the hallowed $1,500 mark by year's end—an appreciation of about 60% over its March 2005 spot price close.
Yet, he believes silver should enjoy a bigger percentage boost in value because physical demand has been consistently outstripping supply in recent years.
"In Europe, Germany in particular, everyone is trying to buy silver bars and coins, rather than gold, but there just isn't the physical supply available. Global aboveground inventories are severely depleted. So, people these days just can't get their hands on enough silver," Frank said.
In the event that any of the world's tiny handful of emerging primary silver producers manages to ramp up production to a critical mass of around three million ounces, they will surely benefit from meaningful economies of scale, Frank said.
This should provide a comfortable earnings buffer against any future volatility in silver prices. And that, he says, makes for a much more dependable and successful business model that will attract considerably more buying interest from institutional investors.
Great Panther Resources Ltd. (TSX:GPR) is another fast-growing silver producer that Frank singled out as an example of a company that has very successfully curtailed mine operating costs while maintaining a steady trend of setting new year-on-year production records.
"They're doing the right things to ensure a good upside for their share price in 2009," he added.