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.
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.