'Silver prices set to leap four-fold in three years'

Silver prices could hit an incredible $120 in just three years, propelled by a physical shortage in the silver market and further momentum in economic recovery, CommodityOnline has reported citing a report by thesilvershortage.com.

Silver is currently priced in US dollars at $30 but could explode in price to $120 in just the next three years. That would be an incredible 300 percent gain on your investment, according to a report by thesilvershortage.com.

It quotes precious metals analyst Mark Thomas, who pointed out that silver has been outshining gold in the last 10 years. Thomas put forward some reasons that make an investment in silver very attractive.

Chief among his reasons is that a heavy central bank selling of silver for many years has kept the price artificially low, which made silver mining unprofitable. This has snowballed into a major silver supply crunch.

Another factor that makes silver more attractive than gold as an investment is the mismatch in above ground stocks of each commodity. Since 1980 the above ground available gold stores have increased 600 percent while above ground available silver stores have been reduced 90% during the same time frame.

Also, the increase in demand from new investors as a result of the democratization of silver investing with the launch of Silver ETFs has resulted in the removal of almost 30 percent of current production annually.

Again, the fact that Chinese exports of silver in recent years has slowed down will put additional supply crunch. It is believed that China is purchasing and storing large quantities of both gold and silver. China’s objective is to make their currency the new reserve country for the world, so they can diversify out of the consistently declining US dollar.'

Commodities like gold and silver witnessed a surge in demand last year as financial markets remained roiled and future looked uncertain. Investors flocked to the precious metals, seen as safe haven investments, as global currencies became too volatile for comfort.

However, there are other analysts who think silver prices will fall in the near term. A rising demand for physical metal signals a “crowded” trade, and that silver prices could fall 20 percent this year, Bloomberg quoted a researcher as saying on Thursday.

“After a period of outperformance from silver, we would be taking a little off the table,” Barry James, the chief executive officer of James Investment Research, said, according to Bloomberg. “It’s more likely that silver will have a correction in price rather than a surge.”

Spot silver traded at $28.76 in New York on Wednesday.