Investors have pushed silver above the recent channel high at around $39 or so per ounce and I fully expect a retest of $50 if any more talk is given about QE3 — Silver rises because of the rising digital money supply, not from speculation. Owning cash is speculative whereas owning metals is conservative or a safe haven at current prices.
Many people will tell you that silver and gold are in a bubble but the fact is that commodities in general are one of the only asset classes that work here because the consolidated banking system is holding our economy hostage and Bernanke is solely focused on saving the banks. Right now, shorting European banks and going long silver and gold looks to be about as good of a “trade” as possible — investors are essentially betting that Europe will face massive credit problems because of the obvious insolvency of Greece, italy, Portugal, Spain, and Ireland.
The next shoe to drop is the US… We are facing the exact same issues as Greece. Japan is also a debt zombie and has been for years now. There deflationary spiral is confusing to say the least, but they are essentially bankrupt as well in my view.
Low global interest rates are the only thing holding the current order afloat, but any hike in interest rates could derail the system and for that reason owning real assets outside of the financial system makes a good deal of sense.
Hope that helps, Gold is a little overbought but it’s in a long term bull market. Silver is looking solid here.