We have spent much time discussing about the direction of gold price in 2013 in the previous article. It is only right we give attention to its cousin, Silver. There were many requests to us about the where the price of silver bullion will head in the coming year, we scoured the web and decided to give an 2013 analysis for Silver. For investors who are risk averse or think that price of Gold is too volatile, perhaps silver investment might make better sense. Though Silver is the poorer cousin of Gold, the latter’s fundamentals still apply. Silver’s prices move in sync with Gold, but with slightly more movements.

Look At The Gold Silver Ratio History

This indicates how many ounce of silver can an ounce of gold buy. Prior to the 2008 economic crisis, this ratio stood at around 50. Since then, it has gone as low as 30 and, currently, stands at around 60 which is a high level. We should expect this ratio to stabilize lower to 50 and eventually head downwards with the rise in silver price.

Silver Hail Obama!

Yes, perhaps unknown to most, Silver was the single best performing financial asset in Obama’s first 4 year tenure starting 2008. With him in the helm for another 4 years, Silver will continue to be well-liked, or at least that’s what history shows.

Silver best performing under Obama

Increased Investment Demand For Silver

There are many signs of increasing demand for Silver in 2012. Central banks policies to spur consumption has made people buy silver as a store of value. The Sprott Physical Silver Trust (NYSE: PSLV) has expanded too with more than 7 million ounces of silver. The US Mint has also moved more silver coins than gold in 2012, highest since such sale started.

More Industrial Demand For Silver

Silver is used in the manufacturing of solar panels. Demand of Silver from the solar industry alone has increase at a CAGR of 50% since the turn of the century. Besides solar panels, silver also has a wide range of uses in lighting, electronics, medicine and packaging etc.

As we can see, the reasons behind the predicted rise of Silver price in 2013 is real and not speculative. Gold has already hit its all time high and it will not be long before silver follow suit.

We say Silver to hit $50, what do you think?


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