Previous year has been a very mixed for Silver investors. By April it was very bullish for silver which rose 61% compared to the closing level in 2010. Silver suffered a setback in 2011, backtracking from a near-doubling in price during 2010, as worries about the global economy and a recent slide in Gold hurt demand. This is its first annual loss in three years.
Silver is now however well below the $30 mark and is thus over 10% in the red from its peak. The huge gains in the first 5 months of 2011 were completely erased in 7 months that followed. A significant setback for the silver bull!
So, how does the coming year look like? We must prepare ourselves as silver investors for the next 12 months and expect a similar volatility as we have seen in 2011? Where should you buy or where should you sell?
Most of you would have been bombarded with many 2012 predictions in recent days, with most predictions ranging from as low as $10 to as high as $50. The truth , however, is somewhere in between.
What do you think - bearish or bullish?
Here are some silver predictions for 2012:
David Morgan, publisher of Silver Investor, still believes silver price will go above $50/oz in 2012. He forecast $65–75/oz silver by the end of 2012.
David Morgan stated, “I don't see the silver price going above the $50/oz level in 2011. In other words, the top is in for this year, and has been for some time. I still believes silver price will go above $50/oz in 2012. I forecast $65–75/oz silver by the end of 2012. I don't foresee a big rush into price appreciation for gold or silver in the first quarter of 2012 (Q112), which is seasonal.”
Eric Sprott, chairman of Sprott Inc. stated, "I think the price should already be substantially higher, the trade should be 16:1 gold:silver ratio in 2012. That implies that at $1,600/oz gold, silver should be $100/oz. At $3,200/oz gold, silver should be $200/oz. The outlook for gold is phenomenal and silver is going to go up even faster. That is why I think that this next decade will be the decade for silver."
James West, the editor of The Midas Letter and portfolio advisor of the Midas Letter Opportunity Fund, isn't interested in timing the precious metals market—that's a good way to end up butchering perfectly good investments. He believes Silver price is going to be one-sixteenth of the Gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. Also he agree with Sprott when he says that silver is going to outperform gold in 2012.
Bob Moriarty, founder of 321gold.com, argues that the Silver Gold ratio over 100 years has been 47:1—47 ounces of silver per ounce of gold. He believes that the ratio could spike to 100:1 during this financial crisis given that historically the ratio has always been higher in such situations.
Alasdair Macleod, Senior Fellow at GoldMoney Foundation, also expects silver to take some bold leaps in the year upon us. In lieu of a dying fiat currency, Macleaod believes silver and gold will undoubtedly take the reigns as the financial currency of choice as the purchasing power of dollars, euros, pounds, and other currencies wanes.
In these uncertain and changing times, more and more investors will be forced to invest their wealth in safer places. Macleod understands this, saying: “We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
HSBC Securities has lifted its silver price forecasts for 2012 and 2013 amid expectations that strong bar and coin investment demand, together with growing interest in silver exchange-traded funds, will push the market higher. It now expects the silver market to average $34 a troy ounce next year, and $32/oz the year after–both of which are a $2/oz increase on HSBC’s earlier forecasts.
“Demand for silver will be sustained by global concerns about fiscal profligacy, political gridlock on dealing with the U.S. budget deficit, long-term sustainability of the U.S. dollar, potential inflationary consequences of highly accommodative monetary policies, and economic uncertainty. Coin and small-bar demand may moderate from current high levels, but remain strong, further contributing to silver price strength,” HSBC added.
Source: Commodity Online
