Silver: Best Streak Since 1980
Source: Bloomberg, Nicholas Larkin and Pham-Duy Nguyen (6/28/10)
"Prices extend the longest run of quarterly gains in three decades."
Doubling as a store of value for buyers concerned about the economy and an industrial material for those bullish on growth, silver is outperforming metals from copper to zinc this year and keeping pace with gold. It will rise as much as 15% to $22/oz. before December, from $19.145 today, according to Deutsche Bank Analyst Daniel Brebner, whose Q4 outlook was accurate to within 0.7%.
While the Federal Reserve warned last week that financial conditions are "less supportive" of growth, investors held a record amount of silver in exchange-traded products backed by the metal, Barclays Capital data shows. Options giving traders the right to buy the metal at $25 before Nov. 23 are the most widely held on the Comex.
"Silver is really attractive because you have strong investment demand and strong fabrication demand," said Jeffrey M. Christian of CPM Group. Silver rose 68% since he recommended buying the metal in a Bloomberg interview in October 2008. "You buy gold when you think the world is going to hell in a hand basket. You buy copper when the economy is booming. In between those two, if you're a bit confused, you buy silver."
While gold reached a record $1,265.30/oz. on June 21, silver would have to more than double to get to the all-time high of $50.35 reached in 1980. Silver rose 13% this year in London, gold added 14% and the LME Index of six industrial metals fell 9.2%.
Silver will trade as high as $21 by year-end, according to the median in a Bloomberg survey of 27 analysts and traders.