Silver Prices to Soar in 2011 Says Investment Guru

23 Feb

Repost courtesy of Kitcosilver.com

Last year in January 2010 I wrote about the coming surge in the price of silver. People who bought in January 2010 have now doubled their money. The stunning news is that silver’s climb is not over. Buying at $33 per ounce may not be for the faint of heart, but with the outlook strong that silver will climb as high as $100 per ounce in the next 48 months, it’s an investment still worth serious consideration.

Chase Kyla Hunter 2.23.2011

Silver to Soar in 2011, Says Investment Guru
By Marc Davis     Printer Friendly Version Bookmark and Share
Feb 14 2011 8:57AM
www.bnwnews.ca

Silver promises to become the next big buzzword among investors in 2011 and beyond, according to one of the investment industry’s most prescient and successful experts on precious metals.

Eric Sprott is the founder of the Toronto-based investment firm, Sprott Asset Management LP. His renowned hedge fund, Sprott Hedge Fund LP, is heavily weighted in precious metals and has generated an estimated 23% annualized return over the past decade. Other similarly oriented funds under his stewardship have also been stellar performers in recent years.

He’s now so bullish on silver that he launched the $575 million Sprott Physical Silver Trust in November of last year as he believes that: “Silver will be the investment of the decade.”

“I think that silver could easily get to $50 this year,” he tells BNWnews.ca.

This all bodes especially well for publicly traded companies that are already mining silver, he says. Likewise for ones that are developing primary silver deposits or gold deposits with plenty of silver as a byproduct.

“If the price of silver continues to go up, silver stocks are going to perform even better,” Sprott adds.

Sprott says the big catalyst for surging silver prices in the coming years will be exponentially increasing investment demand, which is already beginning to overwhelm existing silver supplies. The mining industry only produces around 800 tonnes of silver per annum. This is a relatively inelastic supply, regardless of silver prices, he adds.

As household investors are becoming increasingly jittery about the debasement of the U.S. dollar and other major currencies, they are loading up in record numbers on silver bars, coins and silver-denominated exchange traded funds, Sprott says.

However, there’s also a quantum shift in investment demand taking place among big players in the precious metals market, including India (which is aiming to increase its imports by about 77 million ounces per annum), and of course China.

“China’s net imports of silver were 112 million ounces last year. In 2005, they were net exporters of 100 million ounces,” he says.

“That’s a 200 million ounce shift in an 800 million ounce annual market that seldom ever grows because production hardly ever goes up. So where’s it all going to come from? We don’t know.”

In fact, silver promises to outshine gold over the coming years, Sprott says. “Silver is the poor man’s gold. Gold has had a great run for the past 11 years. But I absolutely believe that silver will outperform gold this year. Currently, there’s more investment dollars going into silver than into gold.”

Such a game-changing scenario should recalibrate the gold to silver pricing ratio in silver’s favor, thereby eventually restoring it to its traditional level of about 16 to 1, he says. “It’s the easiest call of all time.”

“Silver as a currency always traded in a ratio of around 16 to 1 compared to gold, when it was a currency in the U.S. and the U.K. The current ratio is 48 to 1. If we go back to a 16 to 1 ratio, the implied price for silver would be $85.62 (per ounce).” he adds.

“On that basis, if gold goes to $1,600, then that would value silver at $100. And we certainly think that gold is going to $1,600. In fact, I’m willing to bet that this ratio will overshoot on the downside. It might even get to 10 to one.”

The only reason why silver is still trading at a 48 to 1 ratio to bullion’s spot price is that its price is being “manipulated” by big banks, Sprott says. That’s because they don’t want precious metals to become a popular alternative currency to Fiat money (currencies that are not backed by hard assets).

“Then there’s also a huge short position out there on silver,” he adds.

But time is on silver’s side, he says, as the sovereignty debt crisis deepens in Europe and a continued policy of quantitative easing in the U.S. continues to undermine the value of the greenback.

Courtesy of www.Top40GoldStocks.com

Marc Davis,
BNW Business News Wire

Advertisements

4 Responses to “Silver Prices to Soar in 2011 Says Investment Guru”

  1. Byron 02/24/2011 at 4:11 am #

    There’s also the ‘comic silver market’ which ‘they’ are saying that theirs 120 million ounces in reserve but actually it’s close to 70 million, of coarse any silver purchases will require big brother nose being in it! They will pull a FDR on Gold and other precious metals, stones etc! They want to tax us at a 100 percent rate and they’ll decide how to spend our money, so ‘they’ think!

  2. sistertongue 03/22/2011 at 2:31 am #

    thanks, byron, my sentiments exactly. They can confiscate anything they want, so, why buy it? Besides, even if you have silver, what are you going to be able to buy with it? Droughts, floods, fires = no food; pollution = no potable water. This relentless and desperate need to make profits is what is really going to end in the long run.

Trackbacks/Pingbacks

  1. Jim Willie – PHD in Gold and Dam Smart | I Am Jeffrey Green – Finding the Truth - 02/27/2011

    […] Silver Prices to Soar in 2011 Says Investment Guru (alligatorfarm.wordpress.com) […]

  2. Prepare for QE to infinity!!, The Road to a Gold Standard; Jim Willie, CB | I Am Jeffrey Green – Finding the Truth - 03/02/2011

    […] Silver Prices to Soar in 2011 Says Investment Guru (alligatorfarm.wordpress.com) This entry was posted in Jordan Kotick, London Ontario, Silver and tagged Jim Willie, JP Morgan, silver, slv. Bookmark the permalink. ← Jim Willie – PHD in Gold and Dam Smart Ben Davies – Gold Coiled, Hyperinflation May Be in the Cards → […]

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: