Silver on the Verge of Another Breakout

Monday, October 17, 2011
By Paul Martin


Silver appears extremely bullish from a structural point of view, something that myself and others have been talking about the last 12-14 months. We first saw this in the vast reduction in the adjusted open interest (reference to spread positions) by about half followed by 2 monster rallies beginning in Sept 2010 and again in February 2011. From personal experience, gauging physical investment demand, paper (ETF) demand, shape of the futures curve and the Commitment of Traders report, silver will likely see a monster rally to at least the $40-$43 area before year end and possibly a breakout pushing the $50 level. In any case, Silver would be the one commodity I would want to own for the next 12-24 months.

From talking to various bullion dealers around the world as well as hearing stories from others, investors appear to have become savvier, loading up on silver following the 3 day orchestrated takedown from $40 to the sub $30 level. Of those I’ve been able to obtain details from, the demand for silver on the investment side outweighs that for gold, at least in dollar terms. This speaks volumes when you look at the amounts available for investment demand in both metals.

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