Silver at its peak, what should be the ideal strategy?

By Amrita Mashar

In 2010, Silver performed much better than other precious metals in the international market with prices rising by an surprising 80% rise which is two and half times the rise in price of Gold

In the first quarter of 2011, Silver’s price has increased at a steady 40 percent. Along with being considered a safe investment, the relatively low supply of the metal as compared to the high demand has also contributed to the firm increase in Silver prices.

Main reason for investment in Gold and silver is the continuous stability witnessed in the global market. Liquefaction is also an easy process for Gold or Silver bars, jewelry, ETF and coins. Do note that purity of the mineral is of utmost priority and should be given its due importance in ongoing time.

In market reports it has been observed that due to strong Industry demand in US and Asia will be key factor for driving growth in worldwide market. Healthy developing country demand especially in Asian market such as China and India will also be important factor.

China’s silver consumption already accounts for 70% of the global total of industrial use, and its middle class isn’t even close to reaching its spending potential. Fundamentally, Silver has strong upside momentum till 100 Dollar. Industry demands are key driver for movement in Silver price. Silver uses of total consumption in 53 % in electronic equipment, 24 % jewelry, 7 % coins, 13% photos and as 2% as investment purpose .

The talk is there in market that Silver is technically overbought and it may correct any time. But from last few months it have been observed that short term correction can be emerge as opportunity for long term buying.

My view is there in current environment its best option for return is to invest your money is silver. Bullion commodities provide protection again the inflation and also with higher return in long run. Those who are in short from 40 Dollar since beginning of year 2011 can clear out their position in next month. Silver price expected to correct till 41 Dollar before reach to all time high levels in coming months.

The price ratio of Gold versus Silver has been dropping in the last couple of years in favor of the white precious metal. Although the drop seems overdone and the ratio set for upward recoil, the technical damage caused by breaking through the 40 level has been done. Analysts are now predicting silver prices can reach as high as $100 in 2011 and $250 by 2015. In conclusion we can say that for coming months “Gold is strong and Silver is strongest”.

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