Will Silver Soar To $100?
Posted on February 26, 2011 by Bruce Holmes
The price of silver is currently at $46.01 per ounce. Some investors are speculating that price of silver will continue to climb. Some have suggested that it will reach the $100 per ounce mark. Others look at the world economy and say that silver will not go beyond $50 per ounce. These bearish investors argue that silver will suffer due to the high price of oil and its negative effect on the world economy plus governmental monetary policies that may spur inflation.
It is true that silver is increasingly preferred by investors as a store of wealth as a hedge against inflation, but it is still and industrial metal and thus subject to decrease in demand when the global economy slows down. The $50 per ounce crowd looks at current oil prices and fears that the current uncertainty in the Middle East will drive oil prices even higher. They believe that this will reduce overall industrial demand for silver.
Those in the $100 an ounce crowd argue that high oil prices and a slowing economy will not have a drastic affect on the price of silver. This is because there are very few substitutes for silver in its industrial uses. Plus the price point of silver makes it more affordable to a wide range of investors taking a position in the metal as an inflationary hedge. Other metals are not so lucky, for example Goldman Sachs recently said, “that the bank would temporarily exit its bets on higher copper and platinum prices.” The bank pointed to high oil prices and potentially slower economic growth for dumping these two commodities.
The same concern that has pushed silver up over the last 12 months is still very real. That is the fear of inflation due to loose monetary policy. The European Central Bank may be thinking about raising interest rates, but the Federal Reserve does not appear to be willing to raise rates in the near future. There is very little will on the part of governments in general to tighten their monetary policy. When you factor existing governmental spending and debt levels the fear of inflation it very real concern.
There is no way to predict the future price of silver. Traditionally commodities have peaked, but then gravity sets in and brings the asset back to normalcy, no matter how bullish the market indicators may appear to be. It is the obligation of each individual investor to practice due diligence, seek out the good advise, and consider all aspects of the market to make the most informed investment decision.
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