5 Factors That Will Push Silver to $250 an Ounce

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All bull markets go through periods of consolidations and corrections. And precious metals are no exception.

There has been plenty about gold's swan dive, but less talk about silver. And at this point there's more potential for silver than gold…significantly more.

Because the global silver market is relatively small, silver prices tend to be more volatile; the pounding selloff we witnessed in silver this past month is a testament to that fact. But volatility works both ways, so when silver rises, its price can explode higher.

That's exactly what happened in April 2011, when silver prices rose by 170% in the space of just 7 months. That's why silver investors say investing in silver is like buying "gold on steroids."

And right now, it looks like the silver market is on the cusp of doing the same thing all over again. According to our research, the next stop could be $40 by year's end, and $60 by the end of 2014. And much higher after that.

Here are five key factors that will drive silver higher – significantly higher – in coming years.

Silver Driver No. 1: Relentless Buying of Physical Silver

Despite the drubbing that silver took in mid-April, there's one fact that most observers are ignoring: the physical silver market.

While gold and silver prices took a pounding, silver investors were not running to unload their silver — quite the opposite. In fact, savvy investors were flocking to buy physical silver.

Even as silver prices dropped, buyers stepped up, and supply became so scarce, premiums nearly quintupled from 8% to 37% above spot prices. And that's if you could even get your hands on it. Essentially, no one was selling, yet a lot of buyers recognized that silver was "on sale" and decided to stock up.

In the first three months of 2013, the U.S. Mint sold more than 15 million American Silver Eagle bullion coins. That's the first time ever the Mint has sold this many coins so early in the year, setting a record in the 27-year history of the series.

Coin dealers across the U.S. have been regularly selling out of their inventories, desperate to get new allocations.

With investors buying 56 times more physical silver than physical gold, Main Street is setting the pace, while Wall Street is oblivious to the trend.

Silver Driver No. 2: Silver ETFs Are Bulking Up

As savvy retail investors have been soaking up physical silver, so have the silver exchange traded funds (ETFs).

In the first quarter of 2013, over 140 tons of gold was sold by physically backed gold ETFs. But remarkably, silver ETFs bucked that trend.

In that same slice of time, the world's silver ETFs actually added 20 million ounces to their vaults. That's nearly $600 million worth of silver being bought within just three months, all while silver prices were steadily declining.

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About the Author

Peter Krauth is the Resource Specialist for Money Map Press and has contributed some of the most popular and highly regarded investing articles on Money Morning. Peter is headquartered in resource-rich Canada, but he travels around the world to dig up the very best profit opportunity, whether it's in gold, silver, oil, coal, or even potash.

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  1. Seany | April 25, 2013

    Great article. For anyone that wants to delve further into the silver story, here's something for you: The Value of Silver

  2. David Agami | April 25, 2013

    Peter, I love silver. I just bought more. I'd like to know its fundamentals (i.e. supply, stock and demand.)
    I'd also like to know when do you estimate that PAL will start moving up again.
    I've asked these questions to you before, but never received an answer. I sure hope this time you respond.
    Yours,
    David Agami

  3. maurice rothman | April 25, 2013

    Gentlemen:

    Its amazing that many people dont realize how manipulated the gold/silver market has become. The big guys including "honest people" supposedly honest people, honored people, also have ways of manipulating the market basically by their enormous wealth, Buffet is a perfect example along with other enormously wealthy people, "the big fish survives by eating little fish" for every winner there has to be a loser; who loses, the little guy! Now the government being the biggest fish has entered the market big time, the Federal Reserve both manipulators of course – the "little guy" is further being "skinned" – pensions are in doubt? what's next? Fascism of course, disguised one way or another, again, the little guy hasnt a chance, must, should stay out of the stockmarket especially out of all kinds of funds who are thieves of course! White collar crime makes the ordinary criminal look like nothing in comparison! i.e. 2008! result? depression, bigger than the big one in tje nineteen twenties. Obama is "way over his head" presidency means absolutely nothing! Once the "hammer hits, we no longer have our "reserve standing" our dollar becomes "useless, and so does Obama"! We had Hoover, watch out Obama is coming!

    mrothman

    • RJ Schultheis | April 25, 2013

      Yes, Maurice – you are "Spot On" (not just joking). The typical "Sheeple Investor" is at the end of the "Herd" right where the "Wolves and the Big Fish" want the easy prey.

      The tricky part -is to keep your PM out of the radar and safe from the "Lower-Class of Wolves & Smaller Fish who prey on the idiots who also want gun control to disarm the legitimate owners. This is part of an "Under-Current" of Socialism that is being created and PM will be the only safe haven left.

  4. Curtis | April 25, 2013

    Just would like to correct a statement made in the article. Executive order 6102 did include both gold and silver

  5. Counting Ace | April 25, 2013

    The FDR administration confiscated gold because it was our money then. They could not revalue the currency without collecting all (most) of it first. Gold is not money now, nor will it ever be. What government will ever give up it's fiat currency now? The genie is out of the bottle, forever.

    I believe silver will be much, much higher in the coming years, but reason #5 has absolutely nothing to do with it.

    • Walter Baltzley | April 25, 2013

      DEAD ON ACE!

      The government needed to confiscate the Gold to achieve a market monopoly on the volume of money…The People had too much control. Now that Central Banks control 90% of the supply they don't need to confiscate it directly…just manipulate the volume (price) of gold in the market.

  6. Silver Man | April 25, 2013

    I am a confirmed Ag bug but this article is a load of bunk and does nothing to improve my confidence.

    If as per point #1, if the demand is so high (as per my understanding of supply and demand) if the demand is so high and strong the price goes up not DOWN as was experienced last week.

    As to the mint failing to supply coins, articles state that it is due to lack of manufacturing capacity not lack of physical silver as there is lots mined plus the scrap trade. So what is it??

    As well getting awful tired of hearing next year it will be $40+ as that is what u have been saying every year for 2012, 2013 and now 2014.

    As to the big run up in 1980 it was due to manipulation by the Hunt brothers and was not due to fundamentals. Maybe u can factor that in and take that into account and give an opinion on where Ag would have been based on fundamentals rather than manipulation and how that relates to today price.

    Give me something to work with and maybe restore my confidence as I want to believe but am getting awful tired.

  7. dourdan | April 25, 2013

    nanny kept a few gold pieces back in 33 and uncle john and aunt lill took em after grandmoms funeral and then wht ensued

  8. Rama Mohana Rao Perla. | April 25, 2013

    We can not predict Silver rates booming that much happy up to 2016. But one thing we can do buy silver in between $ 17 to 20 per Ounce and keep going on hold until it reach $ 250 per Ounce and selling process will only be by our Grandchildren.