Wednesday, July 20, 2011
Silver breaks the psychological level of $15 price
5:43 AM | 
Posted by
bayan |
Today move has certainly caught many of you off guard. As I am typing, silver price stands at $15.65. Considered by many as the key resistance and psychological level, $15 price hasn't been seen since last August or so. Just before the current recession really got going. There are two contradictory forces currently driving the price of silver. The first one is the safe heaven buying by those who think silver coins and bars will become real money, and please, you can call them what you want - I affectionately call them silver bugs, but don't discount their numbers and purchasing power. As our government prints dollars which sooner or later will inevitably flood the system, silver is becoming a stable value alternative which will hold its value compared to the lower value of each dollar. To put it simply, it will cost much more dollars to buy an ounce of silver. Consider it a cheaper and more liquid safe haven alternative to gold.
The second force is backed by those who have been buying silver in hopes of soon-to-come economic recovery. Since silver is industrial metal, its price fluctuates with economic news which recently have become more positive, or shall I say less negative for too many. Silver is used electronics, dentistry, medicine and photography. The latter though has been using silver much less since digital photo technology became wide spread. But new applications such as solar power mirrors may drive silver price higher.
How high? I have seen numbers ranging from low $20s to $100+. Some say that because most of the silver has been mined out of earth, its shortage coupled with inflation and demand will drive its price to astronomical levels. Some project $1,000 per ounce silver price in foreseeable future. That may seem a bit insane, but consider what Marc Faber, the publisher of the Gloom, Boom & Doom report said, according to Bloomberg. The U.S. economy will enter hyperinflation approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates. We can laugh all we want, but it was Faber who advised buying gold at the start of its 8-year rally, when it traded for less than $300 an ounce, and told investors to bail out of U.S. stocks a week before the so-called Black Monday crash in 1987. Though Faber recommends buying gold, silver will certainly follow. In my opinion, we could see silver price doubling within 2 to 3 months.
The second force is backed by those who have been buying silver in hopes of soon-to-come economic recovery. Since silver is industrial metal, its price fluctuates with economic news which recently have become more positive, or shall I say less negative for too many. Silver is used electronics, dentistry, medicine and photography. The latter though has been using silver much less since digital photo technology became wide spread. But new applications such as solar power mirrors may drive silver price higher.
How high? I have seen numbers ranging from low $20s to $100+. Some say that because most of the silver has been mined out of earth, its shortage coupled with inflation and demand will drive its price to astronomical levels. Some project $1,000 per ounce silver price in foreseeable future. That may seem a bit insane, but consider what Marc Faber, the publisher of the Gloom, Boom & Doom report said, according to Bloomberg. The U.S. economy will enter hyperinflation approaching the levels in Zimbabwe because the Federal Reserve will be reluctant to raise interest rates. We can laugh all we want, but it was Faber who advised buying gold at the start of its 8-year rally, when it traded for less than $300 an ounce, and told investors to bail out of U.S. stocks a week before the so-called Black Monday crash in 1987. Though Faber recommends buying gold, silver will certainly follow. In my opinion, we could see silver price doubling within 2 to 3 months.
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