Orignal Source
Analysts and investors are
becoming increasingly bullish on silver as the summer winds down. As
central banks around the globe are expected to bolster growth via new QE
and related monetary policies, a silver rally appears to be inevitable.
For the past three months, silver held in
exchange-traded products has consistently climbed its way up to a
valuation of $16.2 billion, according to Bloomberg's data.
While hedge funds remain the least
bullish in nearly four years, one has to ask if this is merely an
attempt to control silver prices in a time when nearly everyone else is
assuming that the allure of precious metals will only increase in the
months and years to come...
If the Federal Reserve does follow
through with further quantitative easing, all we have to do is rewind
back to the years 2008-2011 and learn from the recent history to know
what will happen to silver prices.
From December 2008 to June 2011, precious metals prices tripled on behalf of two solid rounds of quantitative easing.
Imagine
what a third dose of easing will do to consumer mentality and the price
of silver and gold. It's an unprecedented event for sure, but the
prices have nowhere to go but up – and they're expected to do so rather
sharply.
While the metal
is trading 44 percent below the 31-year high of $49.845 set in April
2011, it averaged $30.37 since the start of January, on track for the
second-highest annual level after last year’s $35.27.
And hedge funds are
likely to get more bullish – more than doubling their net-long position
or betting on higher prices, to 9,323 futures and options in the two
weeks to Aug. 7 – and as economic pessimism abounds silver demand
continues to increase.
Historically, silver
has been a volatile metal, but investors shouldn't be swayed by the
price swings too terribly. Generally speaking, silver investor
confidence is reaching all-time-highs.
“People like me who have tremendous
confidence in silver and are invested in the market see it rising once
the easing begins,” said Jeffrey Sica, the Morristown, New Jersey-based
president of SICA Wealth Management, who helps oversee about $1 billion
of assets. “I expect an acceleration in the fear trade. Most of the
hedge funds who sold will be back once the market gathers momentum.”
Silver guru, David Morgan, speculates on
where silver will go from here in its undervalued state... find out when
the next major upswing is coming by watching the Kitco video below:
