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Silver To Hit $100 Per Ounce

28 July 2011 42 views No CommentEmail This Post Email This Post

Silver has had a terrific run in the past year. From about $18/oz it ran up to nearly $50/oz. It has since pulled back. Right now, silver is $40/ounce, but it still looks like a good buy for the longterm investor.

Technical analysts at Citigroup say that silver may more than double to $100 an ounce if the current bull market follows similar patterns seen between 1971 and 1980.

Such a forecast might seem pretty frothy considering that futures are trading this morning on the Comex at just above $40 an ounce. But price movements and other technical trends show some similarities to what happened in the ’70s.

Citigroup observes that spot silver prices staged a pair of extended advances with an interim corrective move down from November 1971 through January 1980, a period it describes as silver’s last major bull market.

The technicians also note that since November 2001 through March 2008, the metal jumped 5.8 times before cratering some 60%.

Silver then rebounded and tested the 1980 high earlier this year.

“If the final rally in the last bull market repeated then we can expect $100 over the long term,” Citigroup wrote. “While the high so far this year was at the same level as the peak in January 1980, we are not convinced that the long-term trend is over yet.”

The note was written at the end of last week. Bloomberg checked with the analysts yesterday and confirmed that their views hadn’t changed.

“The move down from the April high this year has come to an end and the double bottom is a good platform for a turn back up,” Citigroup wrote.

That figures to be good news for investors in ETFs such as the iShares Silver Trust (SLV), the ETFS Physical Silver Shares (SIVR) and the Global X Silver Miners ETF (SIL).

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