Silver
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2011 Investing Strategies: Readers Turn to Silver, Avoid U.S. Dollar in the New Year
After a year of rocky economic recovery and a mixed bag of U.S. data, market strategists are waxing optimistic about the profit prospects in 2011.
"There is still an awful lot of pain out there for sure, but if you get this creeping confidence to accelerate a little bit, it's surprising how fast things can turn," Sandy Lincoln, chief investment strategist at M&I Investment Management, told MarketWatch.
A year plagued by Europe's debt contagion, the May 6 market "flash crash" and constant fears of a double-dip recession caused many investors to keep money parked on the sidelines.
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You Heard it Here First: Silver's 30-Year High is Just the Beginning
The price of silver today (Monday) surged above $30 an ounce for the first time since 1980, after U.S. Federal Reserve Chairman Ben Bernanke indicated that further quantitative easing (QE) could be on the way.
Silver futures have gained almost 70% since August, when expectations of more QE were first discussed. Since then, the Federal Reserve has set about purchasing $600 billion of U.S. Treasuries and the Fed Chairman said on Sunday that more debt purchases are "certainly possible."
The result was a rally in precious metals, which played host to investors looking to preserve their wealth against further depreciation. The price of silver topped $30 for the first time since 1980, soaring as high as $30.09 an ounce in afternoon trading.
But that's just the beginning.
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Money Morning Mailbag: Soaring Gold and Silver Prices Point to Profits in Equipment & Drilling Industries
Gold yesterday (Thursday) continued a four-day rise soaring as high as $1,399.70 an ounce as the dollar fell for a second consecutive day.
"Gold is up primarily on dollar weakness and economic optimism," Adam Klopfenstein, a senior market strategist for Lind-Waldock, told Bloomberg. "This is very positive for gold on the future inflation front."
This week Money Morning Contributing Editor Peter Krauth showed why gold and silver are still headed for gains in the New Year, following a 2010 surge.
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Question of the Week: Midterm Elections Leave Investors Wary, Turning to Silver and Gold
The hotly contested midterm elections ended last week, and now U.S. voters will watch to see if newly elected officials will deliver on promises to lift the nation out of its economic morass.
Many voters made their decisions out of frustration with current economic conditions, such as excessive government spending, ineffective stimulus measures and stubborn unemployment. And given the potential for change in U.S. economic policy, investors will likely be eager to see what the stock-and-bond markets will do in the months to come.
Although there is unlikely to be any quick decision making in Washington, investors will hope for the status quo in at least one area - a continued market rally, which is the norm for midterm election years.
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CFTC Investigates JPMorgan, HSBC as Firms Sued for Silver Market Manipulation
JPMorgan Chase & Co. (NYSE: JPM) and HSBC Holdings Plc (NYSE ADR: HBC) were hit with two lawsuits Wednesday by investors alleging the companies conspired to drive down silver prices and gain hundreds of millions of dollars on short positions.
Two traders, Brian Beatty and Peter Laskaris, are accusing the big banks of attempting to manipulate the market for silver futures and options contracts since 2008. The complaints allege the defendants gained millions "if not billions of dollars in profits" by suppressing silver futures and making their short positions on the metal more lucrative.
The plaintiffs said they traded COMEX silver futures and options contracts and lost money due to the manipulation. Laskaris alleges that the banks informed each other of large trades and flooded the market with a disproportionate number of orders, according to Forbes.
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Three Ways to Play the Silver Rally – While Limiting Your Risks with Options
With the global economy struggling to sustain even a modest recovery, the U.S. Federal Reserve pledging further quantitative easing if needed, and the dollar and several other leading currencies showing unrelenting weakness, there have been plenty of reasons for precious metals to rally of late - and gold and silver have done just that.
Gold has set a series of all-time record highs over the past five weeks, topping $1,350 an ounce for the first time ever as the dollar slipped to its lowest level since early January. Silver, while still well short of the $50-plus-per-ounce record it set when the Hunt brothers tried to corner the market in 1979, spiked to its highest price in 30 years and almost five times the sub-$5.00 levels it traded at from late 2000 to 2003.
The combination of bullish fundamentals, strong technical patterns and the persistent price advance has pushed coverage of gold and silver from the pages of specialty metals newsletters and Web sites to headline status in the mainstream media, stoking soaring investor interest in the process.
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Buy, Sell or Hold: Silver Wheaton Corp. (NYSE: SLW) Is Poised to Profit from the White Metal's Rally
Have you ever wanted to invest in a company that owned the supply of a product at a nice fixed rate of cost, but was able to leverage the upside, but not have to take any risk in actually making the product? How about if it's something inherently dangerous and expensive with bad margins like mining?
In the case of Silver Wheaton Corp. (NYSE: SLW) we have a very interesting investment vehicle, because the company does not have to take additional risks to grow its production numbers. Silver Wheaton owns the rights to silver production from mines that produce it as a bi-product. This allows the company to enjoy a growing supply curve, while protecting its balance sheet.
It has already purchased these rights upfront for cash, helping some miners with their capital costs to open a new mine. As these mines ramp up production in whatever primary product they are producing, Silver Wheaton gets access to the silver produced as a bi-product.
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Money Morning Mailbag: Junk Silver "Math" Points the Way to Profits
Just after we published our special report on "junk silver" earlier this week, a Money Morning reader posed the following two questions:
- How many troy ounces of silver is contained in a bag of new coins?
- What should investors expect the total weight of the average bag of junk silver to be?
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Special Report: Though it's Called "Junk Silver," the Profits Aren't Trash
Despite its name, junk silver is not junk.
Indeed, the term "junk silver" is actually a misnomer, since this form of silver investing has provided excellent returns over the past decade. Junk silver consists of U.S. quarters, dimes, and half-dollars minted before 1965, since coins struck before that time contain 90% silver and 10% copper.
But junk silver's real attraction is that it offers investors the best of both the two possible investing extremes that seem to be attainable right now:
- First and foremost, during intense bull markets in silver - like the one we're experiencing right now - junk silver tends to outshine (and outperform) silver bullion.
- But if some of investors' darkest fears are realized, and the U.S. government's overenthusiastic printing of money were to transform the greenback into so much worthless paper, then 90% of U.S. silver coins would be used for the purpose they were originally minted - as money that can be spent.
To understand the basics of junk-silver investing, please read on...
