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Friday, July 11, 2014

Silver price rockets 14% in the past month and going much higher

Posted on 11 July 2014 

Gold still steals all the headlines about precious metals but really in the past month silver has been the real shooting star, up 14 per cent, albeit from a grossly oversold price level.

Nonagenarian newsletter author Richard Russell said silver would take off if it past $19.25 as we duly reported on ArabianMoney (click here) and he proved spectacularly right. So did Clive Maund (click here). Other chartists have since jumped on this bandwagon.

Bottom picking

Calling a bottom is one thing, however. Getting the speed of the recovery right is quite another. Silver's rise is dependent on many factors that have nothing to do with this useful industrial metal that is also gold's only twin as a monetary metal.

That really brings us back to gold again. For pretty much exactly the same factors that are pushing gold higher will engage silver, and then some as silver prices are leveraged to gold.

Why? It's worth repeating for the millionth time that the available silver supply is far smaller than gold so as the precious metal with the lowest capacity to meet a supply shortage the price rises the fastest.

So what of gold? After a couple of years in the doldrums global investors are looking for safe havens again this summer. Whether it's the geopolitical madness of the Ukraine, Iraq or Gaza the world looks a less certain place.

The worries over a default by Portugal's largest bank also highlight mounting concerns about the global economy and the security of what is a very shaky recovery scenario. We are not sure it is actually happening outside of asset price inflation by central banks as suggested today by our article today about the US probably being in a recession in the first half (click here).

What next?

The economic recovery, such as it was from the horrors of the global financial crisis, may well already be over and we don't like the sound of what comes next. The massive bubbles in bond, stock and real estate markets could pop suddenly resulting in a huge destruction of wealth.

How do you preserve your wealth against this? Cash and cash equivalents like precious metals are the logical safe haven moves, and when the central banks print even more money then you will only want to hold the one that they cannot print.

Silver and gold have bounced off the bottom but are going much higher, very much higher.