Silver Prices Only 40 Percent of All-time High

- September 15th, 2010

Although the current 10-year bull market in precious metals has taken gold nearly 50 percent above its previous historical peak of $875 set in 1980, silver is still 60 percent below its all-time record high of $50 an ounce. This is proof positive, say silver bugs, that the white metal has much farther to go.

By Melissa Pistilli—Exclusive to Silver Investing News

Silver prices are rallying right alongside gold this week. On Monday, the white metal broke through the psychologically important $20 an ounce level yet again, but this time it stayed above $20 long enough to build momentum for a break into a 30-month high, closing at $20.57 an ounce on the COMEX Wednesday.

The sometimes precious, sometimes industrial metal is still playing both sides of the fence as it garners safe-haven demand along with gold and benefits from signs of macro economic optimism.

Silver futures prices have gained around $2.50 over prices a month ago, and while the bears think those gains could be easily washed away by any economic data threatening a double dip recession, the bulls are quick to point out that silver’s ties to gold and increasing safe-haven investment demand would help to counteract that downward pressure.

“The bias looks to remain up in silver, as a number of angles seem to be providing the market with some lift,” said Jamie Greenough, futures representative at Global Securities. Still, Greenough recommends caution as “increased volatility” is also at play.

Confidence in silver’s ability to surpass the $21 an ounce prices not seen since March 2008 is high amongst most silver buffs. In fact, $25 silver seems to be the most common figure thrown around the silver investing blogs these days. Although the current 10-year bull market in precious metals has taken gold nearly 50 percent above its previous historical peak of $875 set in 1980, silver is still 60 percent below its all-time record high of $50 an ounce. This is proof positive, say silver bugs, that the white metal has much farther to go.

Jeff Nichols, managing director of American Precious Metals Advisors, believes much of silver’s underperformance is due to deep cuts in silver jewelry and industrial use. “I suspect silver’s underperformance has now run its course — and we can expect the white metal to outperform gold over the next five to ten years,” said Nichols, speaking at the SPC Precious Metal Company Seminar in Bangkok, Thailand on Monday. He points out that several new end uses for the metal will increase demand from industrial users. And, of course, silver will continue to benefit from investment demand for precious metals.

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