The “poor man’s gold” is catching up to the record-breaking rally that gold itself has recently enjoyed.
Silver for immediate delivery leapt 5.4% overnight to $49.79 an ounce, well above the previous record of $49.45 touched in early 1980.
Since silver was barely trading at $28 in January, this represents a stunning 78% move over the last four months.
Retail and institutional traders alike are betting that between QE2 and the prospect of prolonged wrangling over the federal budget, the dollar will keep weakening from here.
While today’s action seems more driven by speculative excitement — traders pushing the metal’s price higher to challenge and then break the record — the long-term fundamentals seem balanced in favor of stronger silver ahead.
Compare the environment now to 1980, when the metal’s record-making spike was attributable to a concerted speculative attempt to corner the global market, but inflation was actually moving down from the oil embargo peaks of the 1970s.
Meanwhile, the iShares Silver ETF (NYSE:SLV) is the way to play the metal if you do not have a commodity futures account or simply do not want to hold a lot of physical silver.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.