Why to Keep Betting on Higher Silver Prices

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As November comes to an end, silver prices continue to hold their luster even in this down week.

On Tuesday, spot silver increased to $34.26 an ounce, its greatest level since the middle of October, before it dropped to $33.76.

Silver traders have hit the sidelines as economic news such as fiscal cliff discussions, the Greek bailout and an appreciating U.S. dollar have been a drag on the white metal.

James Steel, HSBC metal analyst said to Reuters of the current prices, "We believe gold and silver prices will tend towards consolidation, as investors await further developments on the U.S. fiscal cliff negotiations."

But don't worry silver bulls, there's still enough good news to keep you happy.

The Latest Catalysts for Higher Silver Prices

On Tuesday, the Hong Kong Exchanges and Clearing Limited announced three new precious metals ETFs to be listed on the Stock Exchange of Hong Kong.

This included the exchange's inaugural silver ETF, which will be launched by ETF Securities (Hong Kong) Limited, a HKEx subsidiary. This will track the London benchmark price of silver.

Fred Jheon, managing director and head of Asia Pacific at ETF Securities said to Index Universe of the new ETF, "We are seeing growing demand from institutional advisors and discretionary wealth managers formore product breadth in Hong Kong, particularly aroundphysically backed precious metalsproducts. This is becoming animportantthemefor Hong Kong investors."

The introduction of the silver ETF comes after this product has found great success this year. On November 20, silver ETFs hit a record high of 606.2 million troy ounces after hitting an earlier record last spring.

According to a recent Silver Institute report, investments have been a key driver for ETFs this year and the 20% rise in silver prices year-to-date.

Looking ahead to 2013, silver prices should also get a bounce from an industrial demand rebound.

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According to the Silver Institute report, the electronics industry is seen as the greatest supporter for industrial demand and in the next two years with growth from Asia as the top force, look for more reported ETFTrends.

China is expected to catch up to the U.S. in this arena. The two countries combined are forecast to represent more than 40% of industrial demand thanks to an estimated 7% rise from a record-high silver industrial demand in 2013.

This will come from growth in silver oxide catalyst production. Looking ahead to 2014, the photovoltaic industry also will see a rebound.

In the short-term, along with casting an interested eye toward ETFs, money managers increased their bullish bets in silver futures and options last week.

For the week ending Nov. 20, Commodities Futures Trading Commission data showed that traders purchased 3,541 long contracts of Comex silver futures and options while selling 1,974 short contracts.

These actions increased their net long position by 19.8% to 33,317 contracts, up from the 27,802 contracts in the prior week, reported Dow Jones.

The net silver position now sits with approximately 166.6 million troy ounces of silver.

With one month go in 2012, looks like silver prices are on schedule to push above $50 an ounce in 2013.

Are you interested in investing in precious metals? Or simply want to know how high their prices will go next year? Check out this 2013 gold price forecast by Money Morning Global Resources Specialist Peter Krauth.

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  1. Jim Rogers | December 7, 2012

    Are you kidding me!!? Silver is possibly the most manipulated market on the planet. The eventual price for this metal, that has 1000's of industrial uses and has been price suppressed for decades (see the Exchange Stabilization Fund and GATA for details) is closer to $400/oz by 2015.

    get a clue.

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