April 2011 saw silver prices double from 6 months before. Why, and what happened next...?
SILVER PRICES hit $50 three years ago this week, writes Miguel Perez-Santalla at BullionVault.
It was on April 25, 2011 that silver traded $49.80 per ounce in the New
York spot market. That means silver traded $50 somewhere. There was a
lot of business going on at that time, but after holding above $49 for
the rest of that week, silver prices began to retreat. Fast.
One of the factors that many traders were looking at was the Gold/Silver Ratio.
Some believed that silver was much undervalued versus gold, and would
recover its historical price parity of about 16 ounces of silver per
ounce of gold.
So even though silver hadn't been so expensive in terms of gold for 28
years, and even though Dollar prices had doubled inside 6 months, some
traders felt the move wouldn't be complete unless silver traded above the $50 price level it had hit in 1980.
The silver market environment of 2011's run to $50 per ounce was,
however, very different to that of 1980. The principal driver back then
was the continued inflation in consumer prices, plus the attempt by
Nelson Bunker Hunt and his partners to corner the silver market – an
attempt eventually brought to an end by efforts of the Federal Reserve
Bank and certain members of the Commodities Exchange.
Thirty years later the global economy again faced serious concerns. Not
only was the US economy still reeling from the mortgage crisis and 2008
Lehman Brothers collapse. Now the Eurozone faced break-up as Greece, Ireland, Portugal, Italy and Spain all reported serious problems with their finances.
In the United States confidence in the economy continued at record lows. The news out of Europe only heightened concerns of another financial crisis. Then the Fed announced another round of Quantitative Easing
beginning in November 2010. Silver coin sales by the US Mint hit a
monthly record, surpassed only by early 2011's surge in private-investor
demand. Because this new QE meant printing more Dollars (or rather,
their "electronic equivalent" as then Fed chair Ben Bernanke had said).
So in the minds of many investors the Dollar was under the gun. Seeking
safe-haven assets, likely to hold or grow their real value during a
prolonged inflation, became of paramount importance.
MAKE SURE YOU GET PHYSICAL SILVER IN YOUR OWN POSSESSION. Don't Buy SLV, or Futures or Pooled Accounts or any other BS paper silver product .Remember anything on paper is worth the paper it is written on. Go Long Stay long the bull market have even started yet
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