Silver ready to pass $50-an-ounce this week to set new all-time high

Posted on 18 April 2011 with 3 comments from readers

Silver looks set for a sprint past its all-time high of $50 established 31 years ago this week. But with Goldman Sachs now advising its clients to get out of commodities and Glencore, the world’s largest commodities trader launching its $11 billion IPO most probably on Thursday, the end of this surge could come quickly.

Latecomers to the silver party would then face the prospect of selling at a lower level or waiting for the next upswing in this extremely volatile commodity. Market gyrations to date have favored a buy-and-hold approach over market timing, which particularly for silver is very difficult, if not impossible to get right.

Traders say there is presently greatly increased buying pressure but that is being met by a large amount of selling. If this was really the top of a bull market there would not be these sellers left in the market.

Global correction

What are the prospects for the precious metals in the next global financial markets’ sell-off? It is impossible to say for sure. But we do know that there is plenty of cash sat on the sidelines waiting for a correction to buy these metals.

Any dip is therefore likely to be seized upon as a buying opportunity. That should make the dips shallower than in the 2008 sell-off. It is even possible that cash flows so quickly back into precious metals that they advance to new highs while pretty much everything else in the investment universe is down on the floor.

This after all is the protection afforded by precious metals and why people buy a money that cannot be printed or inflated away by central bankers and politicians.

And the biggest dilemma for investors in any financial market correction today is that when they sell they will end up largely with a very unwanted currency, the US dollar. Will they not thus decide to bail out of it as quickly as possible?

Real money

And into what? Well, what about the only sound money left on the planet? Gold and silver. Now the stock of silver is so small relative to gold that the impact on prices will be greatest for the shiniest of all metals.

So this week should be a landmark for silver investors but those cashing out immediately might find that their short term profits very soon look rather small compared with the upside still to come.

ArabianMoney has forecast a target of $320-an-ounce for silver (click here). $50 silver is just another step on this road. Silver is still very cheap. The total market capitalization of commodity trading giant Glencore will be around twice as much as all the silver stored in the entire world!

The next edition of the ArabianMoney newsletter has some original ideas on how to leverage up investments in silver without borrowing money (click here to sign-up).