spot silver

Spot Silver 11 Oct 2010

Spot silver surged higher on Friday recovering all the lost ground following Thursday’s sharp reversal to close well above $23 per ounce once again and to end the week at $23.18 per ounce.  This now takes spot silver to a 30 year high, a price last seen in the early 1970s and has risen for 7 straight quarters, its best run since 1974.  Silver is essentially a cheaper form of gold as it benefits both from being a safe haven and also an alternative currency, although it is generally more volatile and will typically magnify any move in gold.  This is particularly true in falling markets where a small move in the gold price may equate in a much larger move in silver.  The current economic picture, whilst paradoxical, has also been good news for silver as central banks begin to gear up for further quantitative easing as many look to devalue their currencies to prop up their ailing exports.  To be it bluntly nobody wants a strong exchange rate so gold and silver will continue to be in demand as a hedge against currency debasement.  With investors increasingly looking for safe havens silver is likely to continue to rise with the gold silver ratio currently standing at 59, but well above the longer term average of 40.  Our target for spot silver has now been raised once again and we now look towards $26 per ounce by the end of the year.