Reasons to buy silver.

In a blog post of 25 September 2010 in my investment blog, ASSI, I asked: "Do I have a target price for silver? Silver reached its peak in value on 15 January 1980 when 1 oz of gold could purchase only 14.9 oz of silver.  Based on today's price of gold at US$1,299.70 an ounce, it would mean US$87.22 an ounce for silver!  Mind boggling, isn't it? That would be 4 times higher than the current price!  Of course, I am not suggesting that silver would hit that price anytime soon, if it does go that high at all. I am merely putting things in perspective. Remember where the price was in February? Good luck." See blog post here.

For a few days now, silver seems to be flirting with the US$36 mark. At the moment, it is US$36.38 an ounce:

Looking at the technicals, two reversal signals have appeared, a shooting star and a white spinning top. They are just signals and require confirmation. They could be violated and silver could go higher. Having said that, my belief, for what it is worth, is that silver would have to test support as provided by the 20dMA in time. When? That is the million dollar question.

I came across an article in Seeking Alpha which, towards the end, lists five reasons for buying silver:

1.  The Asian nations continue to be very heavy buyers of silver, and any pull back in metals prices will only bolster their commitment to the metals. 

2.  The demand for silver will continue to accelerate to the point that demand will eventually overwhelm supply.

3.  Recent corrections in the prices of precious metals have been both brief and surprisingly shallow.

4.  Silver will once again on a percentage basis outperform gold as the precious metal bull begins to accelerate toward a new leg of advance to the upside.

5.  The price of silver has a lot of catching up to gold to bring it back to the previous historical highs and I think this precious bull market has more depth than the one we witnessed in 1981.


Read full article here.