Silver Prices Will Rally

Written By Brian Hicks

Posted August 21, 2013

Silver’s shine is glistening in spite of the world’s economic ups and downs. A bull market rally for silver is upon us. Will you jump in and take advantage of the soaring prices?

silver coins stacksWhen investors pour money into a precious metal, such as silver, a rally occurs. This money pushes the price of silver up.

What keeps a rally going is the purchasing power behind it. With everyone reaching for silver right now, most investors know it’s not time to sell, which is what could keep silver rallying all the way to the new year.

What’s Silver Doing?

This month has been a big winner for the precious metal. Silver has even outperformed gold, increasing 17% to gold’s 4%, according to MarketWatch. Silver for September delivery is hovering around $22.95.

But what’s even more important for you as an investor is what silver will do in the upcoming weeks and months. If you’ve been reading HSBC’s predictions, be careful. They may not be guiding you in the right direction. The bank believes silver will cap at $23 an ounce and then decline, as Barron’s reports.

David Lennox, resources analyst at equity-research firm Fat Prophets, predicts differently. He believes silver will continue to soar, going as high as $35 by the end of 2013, he told CNBC.

Silver is used worldwide in jewelry, industry, coins, and more. When demand increases, so does the price of the metal. And everything from a dwindling economy sparking safe haven demand to a booming industrial sector could give it a boost.

China just reported last week that it had higher than expected imports, which has excited many worried about its declining economy.

Chief analyst at New Delhi’s Insignia Consultants, Chintan Karnani , told MarketWatch:

“On the fundamental front, there is expectation that the recession will be over in the euro zone and U.K. by the end of the year and [the] U.S. economy is headed for higher growth and the Chinese economy will stabilize. This will result in more industrial demand for silver.”

Since bonds and even some equities are highly volatile right now, what with the Federal Reserve considering tapering its $85 billion in bond purchases, many investors are looking for other investments. Precious metals are known as safe havens, and what many investors are gravitating back to them.

As more investors buy silver, prices rise. As prices rise, more investors will notice the precious metal investment. This brings in more investors, more money, and then higher prices.

Jump in Now or Wait?

It’s evident that silver is bullish right now and the rally will continue for a while, but is now the right time to jump in?

From MarketWatch: According to Malcolm Gissen, co-manager of Encompass Fund:

“The market is ripe for big gains in metals,” said [Encompass Fund’s Malcolm] Gissen, but it may take at least another 12 months.

It’s time to track silver, but it may not quite be time to jump in just yet. Wait until it dips, which is quite possible with the recent rises. As the Federal Reserve comes to a public decision about what will do with its bond purchasing policy, you should see volatility in silver. When you see it dip, jump in.

You have a few options for silver investing. You can purchase bullion, as long as you have the proper storage for it. If you’re not interested in physically handling your investment, the stock market may be better for you. Keep an eye on these silver exchange-traded funds:

  • Central Fund of Canada (NYSE: CEF)

  • iShares Silver Trust (NYSE: SLV)

  • ETFs Physical Silver (NYSE: SIVR)

Silver is shining right now, and it’s going to be shining for quite some time. Keep your eyes on the glistening in winds of economic wavering. It’s likely you’ll start to see why investors worldwide are attracted to the metal over other investments. It may just become your new favorite go-to investment when the world looks a little shaky.


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