Lear Capital: Silver to Rise 1000% . . . Really?

2010_01_05_17_53_260001At the outset of 2014 silver prices rested in the doldrums near $19.50 an ounce.  Judging strictly by the price, one could develop the opinion that no one cared anymore about Gold’s little sister.  That, however, could not have been further from the truth.  As the price fell, physical demand skyrocketed.  Those that knew better saw the opportunity to buy low in order to one day sell high.

In fact, demand was so robust, it put the U.S. Mint on pace to break last year’s sales records.  Low prices, it seems, are to true silver investors what honey is to bears.  They just can’t resist.  By late February, the increased demand for physical silver was strong enough to push silver up 10%.  But that little jump in price was short-lived.  By May, the silver price dipped into negative territory for the year.

If anything should have dashed the spirits of the silver faithful, that should have done it.  Instead, investors observed the signs, stayed the course and bought more.  Here are but a few of the signs that caused investors to savor the opportunity to buy low.   .

  • On average the Silver price was 25% below a mine’s cost to dig it out of the ground;
  • In one month India reportedly bought 22% of all the silver produced indicating rising global demand;
  • New Industrial uses such as Apple’s Solar Sensors and an array of smart watches about to hit the markets will only increase demand.

Now, in case you haven’t noticed, Silver prices, as I write, have pushed out of negative territory and are up nearly 8% on the year.  Hope is back.  Where will it take us from here?

Peter Krauth is a noted metals specialist.  Early in the year, as the silver story began to unfold, Krauth said it is possible for us to see another 1000% rise in the silver price.  He likened our situation today to 2001.  In 2001 the tech bubble burst and stocks crashed.  At the time silver traded at $4 an ounce and subsequently rose to $48 an ounce.

In 2008, when stocks began their monster slide, silver prices had fallen from prices above $20 an ounce to $9.  If Krauth’s speculative comments come true, the path to $90 silver is paved.

But, let’s not get too carried away.  From post-crash 2001 to pre-crash 2008 the silver price quadrupled.  If the post-crash 2008 price fell to $9 an ounce and we saw the same kind of move again, we could see Silver at $36 before the next crash occurs.  Then, after the next crash, the sky may be the limit for silver prices as suggested by Krauth.

Did Krauth make this prediction in blood?  No! He only made an observation. So did I.  And, if we learn anything from these observations it is that crises are stepping stones for the silver price.  Throughout all of history, both gold and silver have risen in price to effectively protect purchasing power.  Today’s silver has just added a little tasty twist to its historical purpose.  Because supply is being depleted every day, the potential for huge gains does exist.

As always these are just more of my opinions.  You may agree or not.  If you do, I would be happy to have you follow me @DaveTheGoldDr.


One thought on “Lear Capital: Silver to Rise 1000% . . . Really?

  1. I have very little cash on hand but I do understand the value of something that is NEVER completely valueless. Since I lost everything in my 401k in 2008, I am trying to build something that will last me through my retirement years. I have 6-7 yrs till I retire for good. Any ideas or suggestions would be appreciated.

    Ed Crawford

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