Silver to hit $50 by end of 2012

NEW YORK (Commodity Online): Silver prices likely to reach $50 an ounce and gold prices to bounce back to $1900 levels, said Stephen Smith, managing member of Smith McKenna, LLC.

According to Smith, the precious metal boom that was cut short in 2011 could be making a strong comeback in late 2012 and over the next few years.

The metal to keep a watchful eye on is silver. Analysts and precious metal experts are in harmony on predictions of silver surpassing $50/oz. and gold edging above $1,900/oz by as early as year end.

Investing in silver ahead of the future outlook for both the global economy and manufacturing sector could prove to be very rewarding. 2011 marked the end to a bullish few years which made a lot of people very wealthy.

While gold is still expensive, silver is the commodity that investors should be paying special attention to. Silver in relation to gold is priced substantially lower; it's undervalued and is expected to respond bullishly over the next few years.

Those who don't currently invest in silver should at least be gathering all the information they can. Current precious metal investors have already shifted their support and focus on the white metal amid global cues and its exceptional properties with continuing limited supply. In short, precious metals should be a part of everyone's investment portfolio; it's all about diversification.

"Most people miss out on precious metal market booms and investing in silver because of uncertainty and lack of information. Potential wealth creation is all about the long term outlook with the right position and knowledge," Stephen Smith added.

Silver has both usage as an industrial metal and value as a precious commodity; making it sensitive to the economic outlook and global manufacturing. Silver has large ties and demand in the pharma industry, solar panel production and electronics.Limited bullion supply, increased demand and global easing could send the price of silver into the clouds.

As a society we're just not as educated on precious metals as an investment source. The banking industry and Wall Street want to remain in the spotlight, but they often have their own hidden agendas. According to Smith, "Silver could perform stronger and be a better investment vehicle than your IRA/401k."

Tuesday's Q2 2012 Euro GDP report showed expected economist predictions with little impact on the silver market.Analysts are still expecting further easing amid high interest rates, debt crises, budget cuts, and limited spending. Money printing and easing could once again send precious silver and gold on a wild ride to new highs.

Silver was seen around $28/oz last week with analysts holding to their notions of silver sitting on the cusp of a strong rebound.There's a reason why investors are currently shifting their focus and doing their homework on precious silver. Its value ratio to gold is heavily skewed and stimulus efforts and economic rebounding could prove to be the recipe that silver has been patiently waiting for.

Silver is a historical form of currency and store of value. Precious metals are a physical asset meaning they are not manufactured but rather limited in supply, making their value exceptionally strong. Owning physical silver is one of the keys to investing in the white metal, staying away from ETFs, Futures and Options.
Source: http://www.commodityonline.com

Silver Price Psychology

People have a natural tendency to seek and understand value. The currently dominant baby boomer generation has a speculative mindset with regard to investment. The relatively frugal generation that lived through the first great depression is now fading in influence, along with their collective memory of harder times.

Both professional and individual traders tend to chase momentum, with pros often using technical analysis to justify market movements and their positioning in the market. Individual investors also listen to professionals talking their book, rather than to more objective experts.

Silver Prices Spikes

Nevertheless, in the silver market, any significant spike higher tends to feed on itself. This is not only due to speculative buying momentum, but also due to short covering buying as the truly limited supply of physical silver exerts its upward influence on the metal’s price.

While inevitable does not imply imminent, the longer the current price suppression paradigm lasts in the silver market, the tighter the spring becomes coiled, and the higher will be the price’s ultimate release upward.

Understanding Silver’s Value

The main point here is that silver’s intrinsic value is currently understood and accepted by only the few who got into the market early. Those who get into it once the inevitable rally has started will be buying on impulse or out of fear, only rationalizing their investment after the fact.

Some might believe that silver’s price spiking higher will suddenly and magically bring out all of the physical silver ever mined throughout history, including the billions of ounces currently sequestered in technological components, silverware and jewelry.

While some recovery of metallic silver from these recycling sources is likely, the most probable outcome will be an increasing scarcity of physical silver that will fail to meet the growing demand.

Although the masses might be manipulated into seeing spiking silver prices as a selling opportunity before the ‘inevitable’ crash — perhaps because 16 ounces of silver historically could buy one ounce of gold — the likelihood remains that silver’s price will ultimately rise both in U.S. dollar terms and relative to the price of gold.

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source: silverseek.com