silver 2013

Silver prices kicked off October reaching a six-month high near $35 an ounce as investor interest has been rekindled in the white metal.

Renewed investor affection for the precious metal in the past few months is in sharp contrast to investor interest in silver over the last year and a half. Many precious metals investors had largely stayed away from silver in that time frame after some had got caught up in its volatility. Silver had touched a 30-year high in April 2011 before plunging 35% in just a few short weeks.

Silver has climbed 35% from its June low just above the $26 an ounce level. This performance made it the top performing star in the commodity universe for the third quarter, with hints of more fireworks to come.

Now it looks as though silver prices will tear into the $40-plus range, nearing $50 an ounce before 2013.

Money Morning Global Resources Specialist Peter Krauth predicts silver prices will reach $48 - $49 by year's end, and hit "north of $60" by spring.

That's why he refers to the white metal as "gold on steroids."

Part of the answer to why silver has done so well recently is the launching of QE3 by the U.S. Federal Reserve. Silver rose 53% from December 2008 through March 2010 after QE1. It climbed 24% after QE2 in the period ending in June 2011. Now we have QE3.....

As Michael Cuggino, who manages about $17 billion at Pacific Heights Asset Management, told Bloomberg News, "In this accommodative monetary policy scenario, silver seems to be trading as an alternative currency."

But the real reason behind the rise in the price of silver goes deeper than just QE3 - or, as some in the market jokingly call it, QE Infinity.

Here are some of the other reasons the price of silver is headed to $50 by 2013.