Will silver drive the rally in 2012?

Thursday, January 12, 2012
By Paul Martin

By Jared Cummans
12 January 2012

Silver has been one of the most talked about commodities over the past few years thanks to its massive price swings. After a dismal 2008, Silver prices soared for the next two years including an approximate 80% appreciation in 2010 alone and in 2011, which brought silver back down to earth despite impressive spikes intra-year. With losses piling up to more than 10% in the previous year, investors were quick to sell out of the flailing precious metal. Silver’s poor performance, however, came as a major surprise especially considering that Gold was up by about the same margin that silver surrendered. But now that 2012 is underway, silver may be poised for another break-out year.

The upside potential for silver seems to be about as bright as the metal itself; last year saw the commodity spike all the way to nearly $50/oz., the highest levels seen in years. Shortly thereafter, silver lost its steam and came crashing back down to earth, but the opportunity still remains for 2012 to see a similar jump, especially given that silver is lower now than it was at this time last year. This year is already looking up for commodities, let alone the battered silver. Alcoa’s earnings report earlier in the week came with a bullish forecast for the year, inspiring some much needed investor confidence and a welcomed rise in general commodities. For those who believe that this is the year for silver, we outline several ways to play the metal below.

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