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Silver Prices

Precious Metals

Will the Price of Silver Go Up in 2013?

By , Contributing Writer, Money Morning - • Print | Email

After this week's performance, we're getting more questions along these lines from Money Morning members: Will the price of silver go up in 2013?

Silver prices closed out a volatile week down $0.91, or 4.61% at $18.81. This week's loss continued silver's painful slump in 2013.

The white metal, down roughly 35% year-to-date, has even fared worse than gold, which is down about 20% in 2013. The serious slump in gold prices, tame inflation and record stock market rallies has taken some of the shine out of silver this year.

Since silver is more volatile than gold, it has underperformed – typical of a bear market.

Money Morning's Resource Specialist Peter Krauth explains, "Because the global silver market is relatively small, silver prices tend to be more volatile. 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 seven months. That's why silver investors say investing in silver is like buying 'gold on steroids'."

So will silver go up this year, or is it destined to disappoint?

Precious Metals

Silver Prices: The Best is Yet to Come

By , Contributing Writer, Money Morning - • Print | Email

It's hard not to get a bit nostalgic about silver prices.

I find myself reminiscing about April 2011 when the white metal ended the month at a sterling $48.70 an ounce after hitting an all-time intraday high of $49.51. That record surpassed the previous high of $49.45 set three decades earlier when the Texan Hunt brothers set out to corner the silver market.

Since the 2011 peak, the S&P has roared higher by some 50%, while the value of silver has tumbled 53%. That's not nearly as bad as the drop silver experienced between its Hunt brothers induced high on Jan 1, 1980 through its low on June 21, 1982, when silver fell a devastating 90%.

Those declines are a reminder of just how volatile the metal's price can be. But with great risk comes great reward, and we see record-breaking gains ahead…

Precious Metals

Silver Prices Getting Huge Boost from these Chinese Market Shifts

By , Contributing Writer, Money Morning - • Print | Email

Twenty years ago China was a very minor factor when estimating the direction of silver prices.

Now, the country is a major force both on the demand and supply side of the silver market.

In fact, a recent report issued last month by Thomson Reuters GFMS for the Silver Institute outlined how China's supply and demand was a major developing factor guiding silver prices in 2013 – and the news is great for those investing in the white metal.

Let's take a look.

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Precious Metals

Silver Prices: White Metal Mania Taking Hold in 2013

By , Money Morning - • Print | Email

Silver prices are up nearly 8% in the past couple weeks as investors increasingly load up on the white metal.

In fact, the U.S. Mint has temporarily suspended sales of its 2013 American Eagle silver coins because it has none left.

Reuters reported today (Friday) that the Mint plans to restart sales in the last week of January after it has had a chance to restock.

The U.S. Mint generally sees a big influx of demand when it releases new coins at the beginning of the year. This year, however, investors seeking a safe haven for their money added to the usual collector demand leaving the Mint's vaults bare.

"It is easy to infer that some element of the fear trade may be at play," Joni Teves, an analyst at UBS AG in London, wrote today in an e-mailed report cited by Bloomberg News. "We view the chunky sales of American Eagle coins more a function of seasonality than anything else. It is important to keep an eye on U.S. coin sales in the coming months to see if volumes remain elevated as the debt ceiling showdown plays out."

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How to Buy Silver: The Best is Yet to Come in 2013

By , Contributing Writer, Money Morning - • Print | Email

While gold, with its sky-high prices, gets most of the media attention, investors should be just as interested in how to buy silver.

Silver turned in a solid performance in the second half of 2012, rising from a June 28 low of $26.13 an ounce to its recent reading above $33.00. And, to steal a line from poet Robert Browning (or, if you prefer, Frank Sinatra), "the best is yet to come."

At least that's how Money Morning's Global Resources Specialist Peter Krauth sees it. He thinks the "poor man's precious metal" should set a new all-time nominal price record in 2013, potentially moving as high as $54.00 an ounce.

Krauth cites four factors in making this prediction:

  • The continued high reading in the gold/silver ratio, which indicates silver is undervalued relative to gold based on historical norms.
  • The prospect that four more years of President Barack Obama's policies will prove inflationary, devaluing the U.S. dollar and thus boosting the prices of hard assets like the precious metals.
  • Growing investment demand as more fund managers purchase the metal to back a growing number of new exchange-traded fund (ETF) offerings.
  • A continuing increase in industrial demand for silver, which is used in everything from solar-power generation and water purification to hygiene and specialized medicine.

Few other assets currently enjoy such broad bullish support – and that means now's the ideal time to either add silver to your portfolio or increase your existing level of exposure to the metal.

Here are a few tips on how to buy silver.

How to Buy Silver

As we told you in last week's story on how to buy gold, purists view holding actual physical precious metals like gold and silver as the only true means of hedging against inflation and gaining an effective long-term store of value.

Silver Prices: An Option Trading Strategy That Tells You When to Buy

By , Contributing Writer, Money Morning - • Print | Email

As last week's Money Morning special report pointed out, the long-term fundamentals for silver prices are decidedly bullish.

However, in today's volatile market, picking the right time to buy silver is something of a guessing game.

But if you are familiar with options, you can let them be your guide in learning precisely when to buy.

And here's the best part: This option trading strategy will only cost you a few dollars.

It works with either options on silver futures – e.g., the standard 5,000-ounce Comex contract, recently valued at around $140,000 – or any of the much more affordable silver-based exchange-traded funds (ETFs) on which options trade.

Taking the Guesswork Out of Silver Prices

For ease of explanation, I'll base our example on the iShares Silver Trust ETF (NYSEArca: SLV), recently priced at $27.34. For comparison purposes, the price of a single SLV share typically tracks the price of one ounce of silver, but is usually 75 to 80 cents lower.

Here's what you do:

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Three Reasons Silver Prices Will Rally

By , Money Morning - • Print | Email

With the recent volatility and lows in the gold market, many investors also have been wary of silver prices.

Silver on Friday closed down 0.4% to $28.87 per ounce. For the week, prices dropped 5.1%.

Not the prettiest picture, but for the year silver has increased more than twice the price of gold thanks to growing confidence that the global economy will dodge another recession bullet.

David Jollie, an analyst at Mitsui & Co. Precious Metals Inc., recently said to Bloomberg News, "A greater amount of confidence in the global economy generally means higher growth and that means more silver demand. If you look out beyond the end of the year, you can still see reasons to be bullish."

Why Silver Prices Will Rally

Increased Demand: The global head of metals analytics at Thomas Reuters GFMS, Philip Klapwijk, has forecast silver sales to increase as end-users expand inventories that thinned at the end of 2011.

A large portion of silver demand – 80% – comes from fabrication, which is expected to rise about 3% to 5% this year to roughly 900 million ounces.

Also helping is China's manufacturing expansion and an increased electronics industry demand.

Klapwijk also sees current monetary policy increasing investors' appetite for silver and triggering a subsequent price rise.

He expects "a continuation of very loose monetary policy," he wrote in a report earlier this year. "We also see rates likely being cut in some of the emerging-market economies such asChina, India and Brazil."

This means current silver market lulls are great buying opportunities since the long-term outlook remains bullish.

Klapwijk toldDow Jones Newswire, "We see a range for silver north of $40 and maybe getting to a low of $28" per troy ounce.

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Silver Prices: New Chinese Futures Trading Supports Rally

By , Money Morning - • Print | Email

We already told you that silver prices would rally this year, and developments last week could make the surge approach even faster.

The white metal was trending down last week until dovish remarks from Team Bernanke following the Federal Open Market Committee meeting on April 25 reversed the price slide. Spot silver prices on the Comex ended the week at $31.27.

But there's another reason supporting a long-term silver price climb.

That reason lies in a news item out of China that many investors may have missed.

China and Silver Prices

On April 26, China Daily reported that the Shanghai Futures Exchange received approval to begin trading silver futures.

Previously, Asian investors had to access international markets to trade silver futures, or else they could trade indirectly on local Chinese markets.

"There has been an absence of a means of trading in silver in China," Wang Ruilei, an analyst with precious metal trader CGS Co Ltd, told China Daily. "The market will be bigger and more liquid with the advent of these futures contracts."

The Chinese announcement allows for two major things to take place.

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Investing In Silver: How to Buy Silver Coins and Bars

By , Contributing Writer, Money Morning - • Print | Email

For investors who want to capture the coming move in silver, buying silver bars or coins is still one of the best options.

Here's why…

Like gold, investing in silver is a great hedge against inflation and financial turmoil alike. It's why demand for silver is increasing at an astonishing rate.

In fact, says Money Morning Global Investing Strategist Martin Hutchinson, "If silver were to match its 1980 peak, adjusted for inflation, it could climb as high as $150 an ounce."

For savvy investors who hold physical silver in bars or coins, that move would deliver roughly a 328% gain from today's spot-prices.

Investing in Silver Coins

Of the two, buying silver coins is a bit more challenging because there are so many different ways to purchase them – including rare coins.

But while rare collectible silver coins are often attractive and sometimes bring in big prices when sold, their value is quite subjective, as they are tied to a number of largely intangible factors like scarcity, wear and quality of appearance.

Rather than becoming a rare coin collector, most investors would be better off purchasing bullion coins if their intent is to ride the silver bull market.

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Special Report: How to Buy Silver

By , Money Morning - • Print | Email

Silver prices soared as high as $50 an ounce last year before experiencing a brief correction that took it back below $30.

However, despite this blip, mounting inflationary pressures, a weakening dollar, and emerging market demand will see silver retest its record highs in 2012. In fact, this time around it could even climb as high as $150 an ounce.

The white metal has already gotten off to a strong start this year, with silver for March delivery surging 5.9% on Tuesday to settle at $29.57 an ounce – the biggest one-day gain in months.

And it's just getting started. So if you don't want to miss the next big bull-run, you might consider the following instructions on how to buy silver.

How to Buy Silver

Like gold, silver investments can be made in a variety of forms. Let's take a look at some of the most popular forms.

Physical Silver: Physical silver can be purchased in a variety of sizes and weights, which determines its price. Most typical are 1.0 ounce silver coins, like the Austrian Silver Philharmonic, the American Silver Eagle, and the Canadian Silver Maple.

Their prices vary slightly due to differences in silver purity, with the Silver Maple being the highest at 99.99% pure. You'll pay about a 16% premium over the silver price for coins due to the cost of fabricating them.

Another popular option is the 100-ounce silver bar, which commands a 5% premium over the spot price of silver.

These coins and bars are essentially bought for their silver content and not as collectibles. If you're looking to build a silver stash – either large or small – bullion dealers may be the easiest way for investors to do so. But do your homework first, and check them out before you buy. Also, avoid paying more than the premiums I noted above for either coins or bars.

Some investors wonder if they should buy smaller denominations, like 1/20th, 1/10th, ¼, or ½ ounce (gold) coins. The thinking goes like this: If ever these coins need to be used to transact and make payments, one would want to have smaller "amounts" to carry around. That's a valid rationale. Even so, keep in mind that you'll pay a premium to the actual silver content, since each individual coin has to be fabricated. I believe that, should we ever get to that point, you could just convert a one-ounce coin or bar into a number of smaller coins, and pay the premium, or perhaps receive whatever else is being used for transactions (a new currency?) in return.

A few dealers that have an established reputation are:

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