Rick Rule Very Bullish on Silver for 2011

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"Very aggressive buying demand has really changed the price of silver."

Rick Rule came out strongly in defense of silver as a top pick for 2011 in a King World News interview.

Asked whether silver shortages would continue he said: 'I suspect it's true. . .at least in the near-term, shortages and the price rises that they cause, ironically, exacerbate shortages."

ETF Buying

Specifically, the amounts of silver that have been bought by ETFs and Sprott Physical Silver have driven up prices. But the silver they have taken off of the market has not been as easily available to mints that have faced increased demand from retail coin buyers. "It's been very aggressive buying demand that's really changed the price of silver," said Rule.

"Gold and silver are in some senses unlike other markets in that they are driven by both of the primary investment motivators in the world, which is greed and fear."

"The fear buyer buys gold and silver because of his or her fear about economic conditions, and the resulting price momentum encourages the greed buyer. The greed buyer's buying in the short term validates the suspicion of the fear buyer, and you have what are called 'echo bull markets.' I think silver is now a classic example of an echo bull market, he said, adding: "If you remember the markets in the late '70's, the 1977 to 1980 bull market, these echo, or hyperbolic bull markets can continue for an amazingly long period of time."

Of the prospects for a big spike for sliver he concluded: "If past is prologue, that's very possible. . .So little silver is produced as a consequence of silver mines; so much more of it is produced as an adjunct of the mining of other metals, lead, zinc, copper and gold. . ."

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