VIDEO: Silver Hoarding: Investor Holdings Spike to Record


Analysts and investors are becoming increasingly bullish on silver as the summer winds down. As central banks around the globe are expected to bolster growth via new QE and related monetary policies, a silver rally appears to be inevitable.

For the past three months, silver held in exchange-traded products has consistently climbed its way up to a valuation of $16.2 billion, according to Bloomberg's data.

While hedge funds remain the least bullish in nearly four years, one has to ask if this is merely an attempt to control silver prices in a time when nearly everyone else is assuming that the allure of precious metals will only increase in the months and years to come...

If the Federal Reserve does follow through with further quantitative easing, all we have to do is rewind back to the years 2008-2011 and learn from the recent history to know what will happen to silver prices.

From December 2008 to June 2011, precious metals prices tripled on behalf of two solid rounds of quantitative easing.

Imagine what a third dose of easing will do to consumer mentality and the price of silver and gold. It's an unprecedented event for sure, but the prices have nowhere to go but up – and they're expected to do so rather sharply.

From Bloomberg:

While the metal is trading 44 percent below the 31-year high of $49.845 set in April 2011, it averaged $30.37 since the start of January, on track for the second-highest annual level after last year’s $35.27. 

And hedge funds are likely to get more bullish – more than doubling their net-long position or betting on higher prices, to 9,323 futures and options in the two weeks to Aug. 7 – and as economic pessimism abounds silver demand continues to increase.

Historically, silver has been a volatile metal, but investors shouldn't be swayed by the price swings too terribly. Generally speaking, silver investor confidence is reaching all-time-highs.

“People like me who have tremendous confidence in silver and are invested in the market see it rising once the easing begins,” said Jeffrey Sica, the Morristown, New Jersey-based president of SICA Wealth Management, who helps oversee about $1 billion of assets. “I expect an acceleration in the fear trade. Most of the hedge funds who sold will be back once the market gathers momentum.”

Silver guru, David Morgan, speculates on where silver will go from here in its undervalued state... find out when the next major upswing is coming by watching the Kitco video below: