Saturday, January 24, 2009

Commodities: Silver Price Going Up

Commodities are starting to resume their upward run, and silver and gold should lead the way.

Investors have been waiting for a breakout, and that time arrived on Friday, as gold and silver exploded in price, with silver surging by 57 cents or 5.1 percent to $11.932.

Silver is similar to platinum in that it is both an investment and industrial metal, making investors look at two sides of the equation in making decisions on whether to invest or not.

It rings true when those watching silver say there's probably little resistance to it moving up to $14 an ounce. Silver could very well be on the cusp of a second move within the commodity bull market in general, and silver bull market in particular.

This is all more than just a moment of fashion or blip, it's definitely the beginning of a new upward move, as silver trends higher in an ongoing rally. Support levels should continue to move upwards, with no short-term signs of a peak in this bull run.

Investors are taking this move to heart and are getting more bullish on silver as an investment as the U.S. dollar begins its inevitable decline, as massive U.S. debt continues to be incurred in response to endless government bailouts.

There haven't really been a series or chain of events that have handed this gift to investors, it's only been a matter of when - not if - silver and gold were going to start rising in price again.

Forced liquidation and deleveraging have been the only circumstances that have held the commodity bull market from rallying even more, and it looks like those are winding down, and money is available to flow back to commodities.

Companies looking for cash to cover debt had to unwillingly sell off their silver and gold assets - along with other commodities - in order to get cash to survive.

Speaking in terms of percentages, we could see silver prices outperform all metals in 2009, a real gift to weary commodities investors who have looked at the sector as having its charm wear off.

Whether the charm has left or not, this is a fine place to be in, and we'll cross the peak destination of the commodity road when we get there. For now, silver will be a tremendous investment for 2009, and the bull rally should continue for some time.

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