Silver will rise by 29% in 2013 according to Bloomberg poll
Bloomberg poll points to 29% rise in price of silver in 2013 but only 60% will finally take out the all-time high
Peter Cooper | December 20, 2012 – 9:19am
A year-end poll of 49 analyst, trader and investor estimates by Bloomberg points to a 29 per cent rise in the price of silver next year after a 12 per cent gain in 2012, exactly double the rise in the gold price at the time of writing.
The same research also highlighted a record 18,854 metric tons in November, or more than nine months of mine output held in exchange traded products. Silver is held by investors as a monetary metal and an alternative currency to paper money.
It pays no dividend. But then a 12 per cent increase in value stacks up well against the 1.8 per cent total return on US treasuries in 2012. Hedge funds have increased their bets on silver to 50 per cent higher than the average of the past five years (during which time silver prices have doubled).
Investors now hold 18,760.34 tons of silver in ETPs, and Morgan Stanley forecasts they will add a further 500 tons in 2013. The bank placed silver is among its top commodity picks for next year, along with gold, corn and soybeans, because of investor demand and a weaker US dollar.
However, silver investors do also have to have strong stomachs for volatility. The metal plunged 28 per cent in the 2008 financial crash before almost quadrupling to current prices.
Reserves of silver are much smaller than those held in gold and yet silver is presently priced at one-fiftieth of the gold price. This means that as demand rises for precious metals across the board the relative shortage of silver exerts a stronger impact on the price.
In the gold investment boom of the late 1970s it was the silver bugs who actually made the biggest investment returns. Silver passed $50 an ounce in 1980, something it has yet to repeat some 32 years later.
It came close in April 2011 and technical chartists say that means the probability of breaching that level in 2013 is tantalizingly high. That would actually mean a price gain of more than 60 per cent next year.
Will 2013 prove to be silver’s big moment? 2012 was a bit of a disappointment to those same high expectations but the price did not collapse, far from it, and is poised again for this major advance.