Silver Bull Run May Take Price to $21

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". . .once gold breaches the $1,000 level and remains there for several trading days. . .look for the next level in silver."

With the silver rising around 10% recently, investors are curious to know where the metal is headed.

According to market analysts, until early next year silver may see more strength in the markets. After that, silver may go a bit down.

In the long run, once gold breaches the $1,000 level and remains there for several trading days, it will be time to look for the next level in silver.

Silver may be lagging at that point, somewhere in the $15–$17 range, but once gold goes through it, it will have a magnet effect for silver. And, silver may reach the $21 high it experienced last year, said a market analyst.

When markets go into a profitable scenario everyone asks the question: How high is high? So there will be very few sellers, and all are holding or buying more. That will put more upward pressure on the metal.

Silver has a dual personality, serving both as a safe haven (like gold) and an industrial metal. Teasing out which drivers are applying the most pressure at any given time can be difficult to analyze.

Obviously in the severe recession, industrial demand for silver goes down, and the investment demand may go up, because of the safe haven status.

One important supply factor is that 70% of all silver comes out of the ground via base metal mining—and base metal miners have been hit hard in the recession. The companies in the S&P GSCI Industrial Metals Index are still struggling to recover the losses they sustained during the financial crisis.

Silver, on the other hand, has been able to recover more rapidly, despite mining cutbacks and less silver being pulled out of the ground. That's because in economic downturns, industrial production drops as well; fewer electronics, optical systems and other silver-centric applications are manufactured.

But where industrial demand has slid, investment demand has picked up the slack.

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