Gold Prices Hit Another Record But Silver Is the Play to Make
Source: Jason Simpkins, Money Morning (8/23/11)
"Gold prices are headed higher, but silver, since it took a spill earlier this year, actually has more upside at the moment."
But as impressive as gold's run has been, silver may be the better bet.
Silver prices rose 2.5% yesterday to settle at $43.47 an ounce.
Make no mistake: Gold prices are headed higher, but silver, since it took a spill earlier this year, actually has more upside at the moment.
This is no secret to "insiders."
The latest CFTC data for the week ended Aug. 16 revealed tactical investors increased their exposure to every precious metal with the exception of gold. Net fund length in Comex Gold fell by 3,500 lots. Speculative length in Comex Silver, on the other hand rose.
The fear is that gold prices, which have been on an absolute tear through the month of August, have gotten ahead of themselves. Gold is up 16% this month, which means its set for its best monthly gain since 1999.
"I think we're overextended in the short term," Axel Rudolph, a technical strategist at Commerzbank AG told Bloomberg News . "I wouldn't be surprised if we were to fail around $1,900 to $1,922 and retrace a little bit for a few days or so. It's still very bullish longer term. Longer term, I think $2,000 will definitely be hit."
In the short-term, silver may be the better investment.
Silver prices rose roughly 150% between August 2010 and April 2011. But the Chicago Mercantile Exchange (CME) unilaterally raised margin requirements on silver by nearly 100% in a mere eight days this spring. That caused silver prices to plunge by 30%.
Since then, silver prices have slowly worked their way back up—and they now appear destined to hit $60 an ounce in a matter of months.
The most obvious way to play silver's potential price increase is through an exchange-traded fund (ETF), such as the iShares Silver Trust (NYSE: SLV), but that's certainly not the best play to make.
In fact, a far more promising opportunity was recently leaked to Money Morning Private Briefing subscribers. If you're not subscribed to Money Morning Private Briefing then you can sign up and receive our premium report on silver, which includes that pick, by clicking here.