I’m calling it now. Not because I’m a fortune teller. I really have nothing on the line. I’m not an investment specialist, so if I’m wrong, I’m not going to loose customers. Worst case scenario is I get bashed in the comments section, and this blog gets more traffic and makes me more money.
With that said, I still feel strongly that the price of silver will reach $50 per ounce by the end of 2011. Why? Many reasons, and here they are.
Investors Have Lost Sight of Underlying Value
We’ve gotten bubble crazy and haven’t learned from our mistakes. There have been too many bubbles in shorter periods of time than ever before. And why? Because people need to make more money quicker to support their bloated lifestyles. We see, we want, we have.
We have stopped thinking about the underlying value things. Your internet stock that makes no money, your house, your expensive SUV, your ____ fill in the blank. People are buying and now investing on emotion. Which leads us to…
All-time Silver High is in Sight
All it will take is some of the large investing news sources to begin writing that silver is nearing the all time high of $48.50 and we’ll have every self proclaimed investor rushing for the quickest way to buy silver. ETFs.
They’ll buy into ETFs, ETFs will be required to buy more silver, demand for silver then goes up, and we’ll have higher prices because supply will go down. Now, having stock piles of silver in ETF holdings isn’t necessarily a bad thing.
Until people start taking profits, or mining companies catch up to demand. Watch out for a free-fall.
People don’t read full stories
This pulls the first two together. People don’t read that the silver high in the 80s was caused by Nelson and Herbert Hunt using mad amounts of leverage to purchase silver and inflate the price and that since then, leverage buying of commodities is limited.
Instead they’ll read that we’re close to the high, that’s it. 140 words or less, try and pack a value statement into 140 words or less.
The price of silver will hit $50 this year, nuf said.
From 1200 AD to the 1700′s the gold to silver ratio was about 12:1. The Demonetization of silver forced the price down by creating a large surplus for nearly a century. The lack of investment in silver mines due to an artificially low price will take a long time to meet demand in a high inflation global environment. At some point real money will be worth a premium to toilet paper cash. George Soros states that markets swing to extremes and do not put prices in equilibrium. Do mind the potential short squeeze or current backwardation, do mind Quantum Expansion of the money supply, do mind that China is buying furiously or that silver is an industrial metal that is consumed. There is less than 1 oz of silver for every 12 people on the planet – maybe far less in current stockpiles – the lowest level since the mid 1300′s when silver was worth the equivalent of $800 per ounce today. Silver is very much a value play.
I have a web site where I give advise on penny stocks and stocks under five dollars. If theirs anyone thats interested in these type of stocks just click my name to check out my website. I would like to comment about silver its may 11 2011 and the price of silver has pulled back to under 40 dollars an ounce from almost 50. I still think silver is a better buy here than gold at current prices.