Silver to pilot bullish commodity rally in 2011

NEW YORK (Commodity Online): As 2010 ends to a close, it is brightness in the commodities trading space globally. Throughout the year, all commodities—ranging from base metals, precious metals and agricultural produces—are all up in value, cheering commodity stocks and heralding bullish run for commodities in 2011.

Gold, silver and copper have led the metals commodities price boom in 2010. Though gold has been the trendsetter in this bullish run, silver has emerged as the darling among commodities among traders. And if traders and commodities analysts are to be believed, silver is all set to pilot the bullish commodity rally in 2011.

According to an year-end survey by global financial news service Bloomberg, silver is all set to lead gains in commodities in 2011. The agency carried out a survey among more than 100 commodities traders and investors and singled out silver as the hottest commodity that can lead the commodity super cycle in the new year.

This week, as the year comes to a close, silver surged to a fresh 30-year high in New York trading.

Throughout 2010, silver has been climbing higher, with support from both the precious and industrial metals industry. The main advantage silver enjoys is that it is simply less expensive alternative to gold.

March Comex silver futures are trading at new 30-year highs, recently changing hands at $30.755 per ounce, up .066. Overall bullish sentiment remains strong for silver.

Silver analysts Kevin Danny says that silver will lead the commodities boom in 2011. “Silver is going to shine in the new year as investors are bullish on putting their money into the commodity. If you look at commodities in 2010, silver has been a sterling performer. So, in 2011, silver will pilot the commodity super cycle,” Danny said.

While technical trend remains bullish for silver, a look at the monthly chart reveals four months of massive gains. Trading analysts like Danny points out that silver is eyeing the 1980 nominal high at $50 an ounce as a longer term price objective.

While gold has grabbed headlines this year with its rally to record highs around $1,400 an ounce, silver has quietly outpaced those gains, and is likely to repeat its success in 2011, reaching $40 an ounce on new applications and industry demand.

An extremely bright future for silver jewellery is one of several reasons to be extremely bullish about silver. To put the jewellery market into context, total jewellery demand was a little over 2,600 tonnes in 2008 (using numbers supplied by the World Gold Council and The Silver Institute).

Of this total consumption, gold jewellery comprised over 80%. Put another way, silver jewellery represented less than a fifth of total demand. The demand for gold jewellery has fallen in the last couple of years — as a response to gold rising to a new, (nominal) record-price of over $1000 an ounce (oz).

Rather as a jwellery, silver also possesses many extremely useful chemical/ metallurgical properties which have resulted in the massive consumption of silver in a variety of industrial applications. Investment will therefore have a major part to play in keeping prices at elevated levels.

Also the world’s supply of silver is being rapidly “consumed”. The evaporation of stockpiles has occurred because the vast majority of silver used “industrially” is in products where silver is used in tiny quantities. Because of this, it is impractical to recover/ recycle this silver, meaning it is effectively gone forever.

http://www.commodityonline.com/news/Silver-to-pilot-bullish-commodity-rally-in-2011-35173-3-1.html