August 30, 2010 - Silver is Hot, Hot, Hot

Featured Trades: (SILVER), (SLV)
iShares Silver Trust ETF

 

2) Silver is Hot, Hot, Hot. Those who followed my advice to watch silver should by now have the precious coins raining down upon them (click here for 'Why the Really Big Play is in Silver' ).

Since then, the precious white metal has jumped 8% to $19.30, just pennies short of a multiyear high, compared to a more pedestrian 4% move by gold (GLD). It is thus fulfilling my prediction that it would outperform the barbaric relic by 2:1 on the upside.

The action has spilled over into the miners, with Coeur D Alene Mines (CDE) rocketing by 19% in two weeks, while Silver Wheaton (SLW) is up 14% and Hecla Mining (HL) has tacked on an impressive 16%.

Precious metals traders have been stumped by the move, expecting that industrial demand for silver would slump in the face of a double dip recession. What they aren't seeing is the surging monetary demand for silver, which continues to grow beyond all expectations. Not only do you see Americans and Europeans fleeing into silver, rather than lock themselves into 30 year returns in the Treasury bond market at 2.5%, the Chinese are leveraging up a rising standard of living into increased silver coin purchases.

Silver also has a much bigger catch up game to play. While gold is a mere 2% off its all time high, silver must appreciate by 153% to reach a new peak.

Your choices here are the silver ETF, the miners listed above, or futures contracts listed on Comex. You can also get physical by adding to your holdings of .999 fine silver buffalos at a small margin over spot by clicking here. If these guys sell out, shop around, because there are plenty of other merchants with competitive prices. You can always use them to bribe the border guards when you are fleeing the country.