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Silver 2012 predictions: What do you think - bearish or bullish?
Last Updated : 02 January 2012 at 17:05
By Commodity Online
Previous year has been a very mixed for Silver investors. By April it was very bullish for silver which rose 61% compared to the closing level in 2010. Silver suffered a setback in 2011, backtracking from a near-doubling in price during 2010, as worries about the global economy and a recent slide in Goldhurt demand. This is its first annual loss in three years.
Silver is now however well below the $30 mark and is thus over 10% in the red from its peak. The huge gains in the first 5 months of 2011 were completely erased in 7 months that followed. A significant setback for the silver bull!
So, how does the coming year look like? We must prepare ourselves as silver investors for the next 12 months and expect a similar volatility as we have seen in 2011? Where should you buy or where should you sell?
Most of you would have been bombarded with many 2012 predictions in recent days, with most predictions ranging from as low as $10 to as high as $50. The truth , however, is somewhere in between.
What do you think - bearish or bullish?
Here are some silver predictions for 2012:
David Morgan, publisher of Silver Investor, still believes silver price will go above $50/oz in 2012. He forecast $65–75/oz silver by the end of 2012.
David Morgan stated, “I don't see the silver price going above the $50/oz level in 2011. In other words, the top is in for this year, and has been for some time. I still believes silver price will go above $50/oz in 2012. I forecast $65–75/oz silver by the end of 2012. I don't foresee a big rush into price appreciation for gold or silver in the first quarter of 2012 (Q112), which is seasonal.”
Eric Sprott, chairman of Sprott Inc. stated, " I think the price should already be substantially higher, the trade should be 16:1 gold:silver ratio in 2012. That implies that at $1,600/oz gold, silver should be $100/oz. At $3,200/oz gold, silver should be $200/oz. The outlook for gold is phenomenal and silver is going to go up even faster. That is why I think that this next decade will be the decade for silver."
James West, the editor of The Midas Letter and portfolio advisor of the Midas Letter Opportunity Fund, isn't interested in timing the precious metals market—that's a good way to end up butchering perfectly good investments. He believes Silver price is going to be one-sixteenth of the Gold price so it's already undervalued by at least two-thirds. Gold and silver are both going to continue to appreciate. Also he agree with Sprott when he says that silver is going to outperform gold in 2012.
Bob Moriarty, founder of 321gold.com, argues that the Silver Gold ratio over 100 years has been 47:1—47 ounces of silver per ounce of gold. He believes that the ratio could spike to 100:1 during this financial crisis given that historically the ratio has always been higher in such situations.
Alasdair Macleod, Senior Fellow at GoldMoney Foundation, also expects silver to take some bold leaps in the year upon us. In lieu of a dying fiat currency, Macleaod believes silver and gold will undoubtedly take the reigns as the financial currency of choice as the purchasing power of dollars, euros, pounds, and other currencies wanes.
In these uncertain and changing times, more and more investors will be forced to invest their wealth in safer places. Macleod understands this, saying: “We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
HSBC Securities has lifted its silver price forecasts for 2012 and 2013 amid expectations that strong bar and coin investment demand, together with growing interest in silver exchange-traded funds, will push the market higher. It now expects the silver market to average $34 a troy ounce next year, and $32/oz the year after–both of which are a $2/oz increase on HSBC’s earlier forecasts.
“Demand for silver will be sustained by global concerns about fiscal profligacy, political gridlock on dealing with the U.S. budget deficit, long-term sustainability of the U.S. dollar, potential inflationary consequences of highly accommodative monetary policies, and economic uncertainty. Coin and small-bar demand may moderate from current high levels, but remain strong, further contributing to silver price strength,” HSBC added.
Bank of America Merrill Lynch (BofAML) estimated that there is a good upside potential in 2012 Silver prices. As per the bank, prices should average $34/oz, followed by $37/oz in 2013, because of continued interest in the metal.
Silver fundamentals have been improving in recent years for a host of reasons, including increased demand from emerging markets, somewhat reduced drag from the photography sector and higher usage from new applications. This suggests that gradual increases of silver quotations were justified. Use in applications like solar panels should increase going forward. Demand from the photography sector has fallen steadily and scope for further large reductions in off take is limited.
TD Securities looks for an even greater 9% gain, to 1.021 billion ounces.
Barclays Capital has bullish outlook for silver in 2102, an increase of 24% to $35 an ounce.
Commodity Online Research estimated that silver prices may witness moderately bullish trends in 2012 on global macro-economic uncertainties and possible fall in industrial demand for the commodity.
Deutsche Bank is forecasting $37 for silver in the first quarter, $39 in the second and $44 in the third and fourth quarters.
According to Professional Numismatists Guild (PNG) silver in the first quarter varied from $24.35 per ounce to $57.50 with a mean average of $34.04, and from $23 to $130 with the average of $48.73 by the end of 2012.
Six factors would drive the price of silver higher
--There are more (probably much more) than five Billion ounces of Gold bullion collecting dust in vaults around the world, and more is added to the vaults everyday because more is mined than is used as jewelry or industry or investment products.
--There is less (probably much less) than one Billion ounces of silver bullion available for consumption by industry, and that number is further depleted every day because less is mined than is either consumed by industry or is converted into more valuable investment products.
--Perhaps 70% of the silver currently being mined is a byproduct from base metals mining. As the world continues to fall into a deeper inflationary depression, the amount of base metals that will be mined will reduce as worldwide construction demand decreases with the slowing economy. That inevitable reduction in base metals mining will further exacerbate the supply deficit in Silver relative to the demand.
--The industrial applications that consume silver cannot reasonably substitute other alternatives, so those industries must have silver to continue their business. The amount of silver used in each product is small, so the use of silver is price inelastic because industry will continue to consume silver even after the price increases substantially from current levels. The real wild card is that all industries have migrated to just in time purchases of the Silver that those industries must have. When news gets out that one industry is having trouble getting delivery on cheap bullion silver, there will be a stampede by all industries to lock in the physical they must have to continue production.
--The Banksters have been artificially depressing the price of silver for decades, and those criminals continue to squelch price rises in silver by selling huge quantities of paper that is not backed by anything. The investment world is beginning to realize that paper promises have little meaning, and that smart investors need to hold physical. As that migration to physical accelerates, the paper market will become much less relevant and the Banksters will be overrun with demands for physical. The explosion in the price of silver will be so strong that it will even be able to carry its little brother Gold to higher prices.
--One silver problem is that buyers get too much metal for their money. As silver rises, it will not take as much space in secure storage, and big money people will consider putting some of their wealth into silver. That buying by big money will drive the price of silver exponentially higher, as each increase in price makes silver that much easier to store. People who prefer to buy gold because silver is too heavy and bulky will be happy to hear that someday they will be able to get much less silver for their gold, because the price of silver will increase so much more rapidly.
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Charles Biderman of TrimTabs (the man that tracks the cash around the globe) On 2012: Long Gold, Short Euro & Stop Praying For A Miracle
zerohedge.com
DECEMBER 31, 2011Political will of desire to do anything but kick the can down the road - that can is getting bigger heavier by the minute. Read More
623 words - Reading time : 1 - 2 minutes
We all understand that the future is unknowable. Events yet to come cannot be predicted. Nevertheless, the outlook for 2012 is probably set in stone, and the reason is simple. The financial crisis imperiling the globe for the past several years has not been solved. Until it is, we can expect more of the same – specifically, serial bailouts of governments and banks that, if not already insolvent are bordering on insolvency. It is a distressing prospect.
Perhaps the outlook for the months ahead can be best summarised by the Governor of the Bank of England, Sir Mervyn King. In a recent interview on British television, Sir Mervyn in a rare candid moment made a remarkably bold statement: “This is the most serious financial crisis we’ve seen, at least since the 1930s, if not ever. We’re having to deal with very unusual circumstances.”
It is somewhat odd that Sir Mervyn chose the word “unusual” to describe the present situation. After all, banking crises and defaults on their debts by sovereigns – princes and kings as well as countries – have been a recurring feature of monetary history even before the founding of the Bank of England in 1694. So there is only one reasonable conclusion from his comment. He was obviously referring to the severity of the today’s circumstances, meaning that the depth and long duration of this present crisis have few parallels.
Sir Mervyn went on to add that it is necessary for central bankers “to act calmly to [these circumstances] and to do the right thing.” While his comment reads well, and may even extract a sympathetic response from some people, do his actions confirm his words? More generally, are central bankers doing the “right thing”? For the answer, we only need to look at the price of gold.
Gold is a barometer of the ill winds stirred by monetary problems. It is as reliable as a canary in a coalmine. The rising price of gold flashes for everyone a clear warning signal. And a rising gold price is what we can expect in 2012, for the same reasons that it has been rising for a decade.
First, central bank money printing continues unabated. It is the repeated answer that central bankers offer to address all of today’s financial problems, with the only outcome being the continual erosion of the purchasing power of national currencies – what is usually referred to as inflation.
Second, people everywhere are increasingly worried about the safety of the bank in which they have money deposited. Ever since the collapse of Northern Rock in the UK four years ago, confidence in banks has been diminishing. The failure of Bear Stearns, Lehman Brothers, MF Global in the United States and the near collapse of Dexia, the Belgian-French bank, have only provided more evidence that there is real reason to worry. These failures also illustrate that the problem of insolvent banks is a global phenomenon.
Third, the interest income one can earn on a bank deposit is not sufficient compensation for the counterparty risk being taken. Even worse, the interest income is less than the rate of inflation, with the consequence that bank deposits result in the loss of one’s purchasing power.
I could go on, but these observations made my point. To all of these problems,and indeed, all the problems that plague national currencies, gold provides a safe refuge.
To end as I began, the future is unknowable. Consequently, we do not have solutions for today’s problems we only have choices. For 5,000 years, gold has been the world’s preferred money. Being tested time and again over the millennia, gold’s proven record continues to make it the preferred choice for a future that is always uncertain.
Gold to hit $3800 by end-2012, silver to triple due to shortages
By Jack Kneafsey
A few days ago I had the opportunity to speak with Alasdair Macleod, a proponent of sound money and Senior Fellow at the GoldMoney Foundation.
The interview was a fascinating discussion on the concept of money itself, different schools of economic thought, plus what may lie ahead for gold, silver, and the West.
A chief topic during the interview was Keynesian Economics and it’s deadly impact on society
Alasdair: “Keynesianism is a self-serving mechanism,”in which, “only governments, their cronies, and banks benefit.Outside of Ron Paul, you don’t have anyone with the foresight or the guts to take the Austrian view. If members of congress or parliament do find out about Austrian economics–they have to keep quiet about it because of the politics of the system itself.”
On the future of Paper Money
Alasdair:“We don’t have very long left to live under fiat money. We’re on an accelerating road to a complete destruction of paper currencies, with only about two and half years left to go. The economic establishment is collapsing. On one hand it’s frightening, and on the other it’s very exciting.”
What does he expect from Gold and Silver in 2012?
Alasdair: “Gold & silver will be considerably higher at the end of 2012 then they are today. The acceleration in money printing going into next year will diminish the purchasing power of dollars, pounds, euros, and other currencies against gold. Looking at my models, gold should be priced around $3800 by the end of 2012, and silver’s got potentially a triple or more over the next year considering the shortages”
As a final warning to investors Alasdair concluded,“We live an upside down world where, the things meant to be risk free are suddenly full of risk, and the parties which traditionally carry the risk are absolved of it.”
This interview was quite the intellectual adventure, and is a absolute “must-listen” for investors and students of economics
Source: bullmarketthinking.com
'Gold may decline further in early 2012'
LONDON (Commodity Online): After falling $350 an ounce from their all-time highs, Gold prices could see further weakness in the start of 2012, said Mike Zarembski, senior commodity analyst, optionsXpress.
“Not only has gold begun to lose some of its ‘safe-haven’ luster, but several key technical indicators look to be pointing to even lower prices at the start of 2012,” he said.
As evidence, he cited gold remains under the 200-day moving average, a strong U.S. dollar, and that the uptrend line drawn from the key October 2008 lows was broken on Thursday for the first time.
A weekly close below this trendline could Lead to a bout of accelerated long liquidation selling. Assets that were being moved into gold due to concerns about Europe and its handling of the debt situation are being moved to U.S. Treasurys and German bunds.
“Investors now appear more willing to earn even meager interest from owning government bonds than they do owning precious metals that not only pay no interest, but are also a cash drain, as both storage and insurance on metal holdings must be paid,” he added.
The break of the October 2008 uptrend was short-lived and if that level can hold, it could spark bargain buying, he said.
However, Zarembski said based on the Fibonacci retracement from the October 2008 lows, “we notice prices have not even retraced to the 38.2% level! This could potentially Lead to further losses, with the 50% retracement not coming into play until the $1,300 area.” If prices break Thursday's low, the next support point is seen near the $1,478 area, with near-term resistance found at the Dec. 21 high of $1,642.10.