Silver Set to Soar
as it did in the 1970s
Mark O'Byrne
GoldCore
Nov 3, 2009

Silver remains very undervalued on a historical basis (charts below) and is undervalued even against gold. Silver remains the preserve of relatively few contrarian investors and the media rarely, covers silver. Yet silver is likely in the middle stages of a bull market that will surpass that of the 1970s.

After an 18 month period of correction and consolidation, silver looks set to challenge its non inflation adjusted highs of $48.70 per ounce and its inflation adjusted high of some $130 per ounce in the coming years.

Why Silver is in a Bull Market and How High Could it Go?

Precious metals have been the best performing asset classes in recent years with gold and silver outperforming equities, property and most asset classes over a 3, 5 and 10 year period. This outperformance looks set to continue in the coming months due to the very bullish fundamentals. The primary reason for our bullish outlook on silver is due to the continuing and increasing global macroeconomic, currency and geopolitical risks; silver's historic role as money and a store of value; the declining and very small supply of silver; significant industrial demand and perhaps most importantly significant and increasing investment demand.

While this price target may seem outlandish to some, it is worth remembering that silver's record high in 1980 adjusted for inflation (according to US government inflation figures) was some $130/oz.

Silver is very unusual as its supply is inelastic.

This means that silver production will not ramp up significantly if the silver price goes up. There are only a handful of pure silver mines remaining - many with depleting reserves. This inflexible supply means that we cannot expect significant mine supply to depress the price after silver rises in price. The decline in refined silver stocks, from around 2.2 billion ounces in 1990 to around 300 million ounces today means that silver stocks are near an all time low.

Silver bulls believe that silver will be valued at well over $50/oz in the coming years and silver remains the investment opportunity of a lifetime.