By MoneyMorning.com.au
For years, industrial uses of silver dominated the silver market. It’s used in things like solar panels, electronics, photography and jewellery.
But now, silver is becoming an investor’s metal.
Private ownership has doubled in the last five years to 2.2 billion ounces.
Today I’ll show how this investor demand will keep pushing up the silver price.
After the big cracks started to appear in the financial system in 2007, the silver market changed.
It took silver away from industrial users. And since investors flocked into the silver market in 2005, Aussie dollar silver has quietly gained an average of 22% a year.
But there’s more in store for silver. Mints can’t keep up with demand. The Perth Mint recently emailed its clients to say: ‘Demand is currently at unprecedented levels, and we have been inundated by high levels of web and telephone traffic from clients all around the world.’
And when I chat with silver miners I keep hearing the same thing: Refiners and miners are ‘extremely keen’ to get their hands on more metal.
So what does this mean for the future price of silver?
We are rewriting the rules by turning silver into an investor’s metal. Instead of the price being a measure of its value in manufacturing, the silver price is becoming a measure of how big a mess the global financial system becomes.
Silver’s only gained 8% in Aussie dollars this year. But silver’s big years – where it’s had gains of 33%, 43% or 58% – have historically followed slow years like this one.
And the silver market is ready for a big jump. I’m convinced silver could rise from $33 to $50 an ounce next year.
Even if silver only continues to rise at its current rate of 22% a year, the price would be $203 an ounce by 2020. And that’s a very conservative forecast.
If you think that sounds outrageous, bear in mind that as of September, the silver price had increased 10-fold in only 10 years.
The case for investing in precious metals, especially silver, has never been stronger than it is today. In fact, it’s one of the top resource plays I recommend for 2012…
Dr. Alex Cowie
for Money Morning Australia
P.S. Over the last 15 months I’ve been travelling the world visiting the projects of a whole host of resource companies on my watch list. The last few weeks I’ve been busy writing up my findings. My research will be ready later today. In it, I reveal my top resource plays for 2012. So watch this space!
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