Monday, January 31, 2011

$50 Physical Silver by April 2011

In reading the title, your initial response may be one of doubt, yet hopefully curious enough to hear me out.  If I am wrong, I will have no problem in admitting so when the time comes, and that is all I am going to say about that.
First, let us take a quick recap on how far silver has come.
From 1970-2002, Silver has been an approximately an overall flat investment (on an annual nominal basis).  The one major exception was the great silver spike that had silver surge touch 50$ at one point.  You can read about it here.
If you bought silver in 2002, you would be up approximately 600% with current spot price of silver at $28.01.  In doing some simple calculations, that is an equivalent return on investment of ~25% per year, annually compounded.
Silver has been forming a short term exponential price function since 1996 with its only big “hiccup” in 2008.  It is important to know that in 2008, the price of silver (& Gold) dropped due to futures and options of silver (&gold) selling off, not physical silver. There is a lot of long exhausting research that has been done on this matter, and I will leave you to this link as a starter for this topic.
Since the lows of ~10.50 in late 2008, silver has gained approximately 275% from lows in 2 years for an annual return of approximately 66% annually compounding returns (idealistic timing).
Now focusing more on the short term, let us check the previous 5 months in silver.  Starting from August at $18 to our current $28 dollar level, silver has gained an impressive 55%  strongly suggesting an upward direction in only the last  5 months (from a once completely dormant metal for so many years).  It is quite a sight to behold, and one must ask the question will it continue?  And what will future prices look like?  And how soon?

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