A few points to consider for 2011...
Regards - VHF
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What Will 2011 Bring For Paper and Physical Silver
AgAuPM Newsletter
December 26, 2010
Hmmm…this is one of those questions that could make you big wealth – if you knew the answer already now.
I’m no prophet but can make predictions only based on the analysis of freely available info.
No problems that escalated in 2010 regarding financial systems, debt, collapsing of real estate sector…has been solved.
In fact all this issues are even more painful and will increase in pain intensity in 2011.
With more money printing and looks like inflation also kicking in in official stats (even with price of food skyrocketing already in 2010), we can expect that 2011 will be…
…another profitable year for investors in physical forms of silver and gold.
I’d recommend everybody to stay away from paper investments but if you’re willing to risk your money, then I think that investing wisely in certain silver and gold mining stocks could bring you nice rewards.
The most explosive gains could be in silver market – especially if 2 biggest holders of short positions in paper silver derivatives, JP Morgan and HSBC would be forced to cover at least a part of their positions.
This will happen only if demand for physical silver would intensify and with current short squeeze in physical silver bullion coins and bars, this could happen in next 6 months.
Looks like key role in this will have China:
- Chinese population increasing demand for physical silver,
- China reducing further their silver exports,
- China launching in 2011 silver ETFs that will allow their population to invest in carefully selected silver ETFs that invest in physical silver like PSLV and silver mining stocks,
- depending on US and China political tensions, China has a power to bring down US financial system alone (stop buying US debt through buying their bonds or buying silver futures at Comex and then demand delivery of physical silver which Comex dealers don’t have).
Not to mention that industrial demand is picking up since now India is also increasing demand for physical silver and once you have few such players that want physical silver, then paper silver derivatives will get crushed and owners of paper silver derivatives like SLV will be left with worthless paper.
In my eyes, in 2011 owners of physical silver will do exceptionally well and price of spot silver around $50 is realistic (physical silver then at $60 or higher).
Even if price of silver goes only to $40 in 2011, this is at current prices a yield of around 36%.
Interestingly, in European countries that have 20% VAT, price of physical silver is already around $40 today and in China price of physical silver is today around $49.5
And demand for physical silver is going up.
This shows enough how paper price of silver at Comex at $29.2 today with price of physical silver in China at around $49.5 is complete nonsense and only possible with paper silver market being manipulated.
Price of paper silver can also drop to $25 or lower for short time but in the long term, buyers of physical silver will be rewarded since price of physical silver might go up even if price of paper silver going down.
This can happen cause there’s an unlimited amount of paper silver (naked shorting) but amount of physical silver is limited.
At the end, final decision what to do with your paper money is yours.
Do your own due diligence and I hope your decision will be right one.
