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![]() (ONE) PAN AMERICAN 5 GRAM .999 FINE SILVER BAR NEW FROM NWT $$$$$ US $12.99
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Pan American Silver
Pan American Silver Corp PAAS Earnings Silver Commentary
The Fundamental move for Silver 2011
* The basic underlying demand for silver comes from industrial usage. This has been rising slowly over time, but is a slow long term trend, not the spike we are seeing now.
* Supplies of silver have dropped over the past few years, but expect increases heading forward.
* Gold has been used a monetary hedge, but if the economy keeps on improving, there could be increased downward pressure on prices. While there is a link between silver and gold prices, and silver is also used as a hedge, when the economy turns up it increases the industrial demand of silver.
* The gold/silver ratio has a vast range from 14 to 90 and currently sits in the high 40s.
* The silver ETF SLV has greatly increased overall demand.
Where does that leave us? The surge in silver investing has greatly impacted supply, increased demand, and prices have popped up to nearly $31 at the beginning of the year. The long-term picture for silver looks very strong, although investors now can greatly affect prices in the short-term.
Gold and Silver Forecasts and Predictions for 2011
Goldman Sachs (GS) has predicted a 2011 average price of $1,329 for gold. Industry is quite dependent on silver, although over time they may find cheaper alternatives if prices go through the roof. Take into consideration how the silver market was cornered in 1980 when prices spiked to almost $50. Adjusting for inflation, we have a potential to pop to $128 if that short-lived phenomenon were to happen again. Still, even with a more reasonable gold to silver ratio of 30, prices could go up to higher.
Some silver stock picks that investors are favoring on this run:
* Silvercorp Metals (SVM)
* Pan American Silver (PAAS)
* Silver Wheaton (SLW)
* Silver Standard Resources (SSRI)
* First Majestic Silver (AG)
* Hecla Mining (HL)
* Mines Management (MGN)
* Mag Silver (MVG)
A very popular silver ETF is SLV; others include USV and SIVR. Although you could also use a 2x leverage fund with AGQ, and if you think silver is a sell there is a 2x leveraged short silver fund with ZSL.
The Stock Market Today Technicals on Silver:
There has been a sharp pull back from the recent highs of at least 10%, this is normal during parabolic moves. Expect further short term weakness, but increased volume as bargain hunters take positions in the low $40 range which is where the mid term support uptrend is at the moment.
About the Author
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