Why Silver Prices Are Headed To $46
Michael Lombardi: As gold bullion prices declined in the period from April to June of this year, so did silver prices. And just like gold bullion, the bullish case for the white metal’s prices continues to build.
Demand for the white precious metal is not just robust; it is rising. The chart below compares sales of silver coins at the U.S. Mint in the months of January to July of 2012 and 2013.
The demand for the precious metal is strong, having risen by 50% in the first seven months of this year compared to the same period a year ago.
Last week, Chris Carkner, the managing director of sales for bullion, refinery, and exchange-traded products at the Royal Canadian Mint, said, “Year-to-date, after the second quarter, we’ve had record (demand) volume for silver Maple Leafs, the greatest we’ve had in the over 25 years that we’ve produced them…” (Source: “INTERVIEW: Gold, Silver Product Demand Is ‘Very Strong:’ Royal Canadian Mint,” Kitco, August 14, 2013.)
Data Source: U.S. Mint web site, last accessed August 23, 2013
Looking at the technical picture, the chart below clearly shows the bottom in silver prices and the new upward-moving price trend.
Chart courtesy of www.StockCharts.com
Yes, prices for the white precious metal are down for the year, but after breaking below $19.00 an ounce, they quickly recovered and found support, as shown in the chart above. Unlike gold, silver prices tested the same support level ($19.00 an ounce) on several occasions, and they always bounced above that level whenever it was tested.
Have silver prices hit a bottom? Price manipulation aside, fundamental demand and technical analysis both make a good case for higher prices ahead.