Silver Profits: How Far Can The Silver Bull Run?

| April 29, 2011 | 0 Comments

I have to admit something…

I was a bit off on my silver price target for the year.  It shames me too say it.  I’m a bona fide silver bull after all.  But even I underestimated the short-term potential for silver.

You see, in early 2011, I set a year-end silver price target of $50.

Some of my colleagues said I was nuts at the time.  Back then, silver was trading for $30 an ounce and they thought the bull run was ending.  They didn’t see the upside potential in the widely misunderstood industrial metal.

I love watching their faces as silver surges day… after day… after day.

But I was bullish on silver well before $30 an ounce…

Long time DWR readers know this for a fact.  I gave you the technical scoop to buy silver at $18… $21… and again at $30.

Congratulations to everyone who jumped on these trades!

The last few months have been truly astonishing for silver.  Here it is the end of April and silver’s already hitting the $50 area… a full eight months ahead of schedule!

And it’s not done yet.  You can expect higher prices in the future…

Take it from somebody who made the initial buy call, silver is nowhere near topping out for the long run.  In fact, silver is likely to continue its phenomenal bull run in coming months.  Once the $50 area is broken, silver could easily push the $60 area in short order.

Why $60?

The silver bears know $50 is their last chance to keep the metal under wraps.  Rest assured the bears will be shorting heavily at the $49-$50 resistance area.

The $50 area is known as the “Hunt Brothers High”.  It’s named for Nelson and William Hunt who attempted to corner the silver market in the late 1970s.  They’re manipulation pushed silver prices to the $50 area before the scheme collapsed in January 1980.

Once the $50 resistance zone is broken (which it eventually will be), silver will be trading at all time nominal highs.

And then you can watch the fireworks fly!

The silver bears will be gored in a phenomenal short covering rally the likes we’ve never seen.  It’s highly likely the $60 area will be attained within days of the upside break of $50.  It’s tough to say how far the short covering rally will run, but $65 isn’t out of the question.

And what about the long run?  The question on every silver investors mind is the end game for silver.

How high will it eventually go?

I’m expecting $130 an ounce for silver in coming years…

Why $130?

According to the Wall Street Journal, it’s the inflation adjusted “Hunt Brothers High” from 1980.  Given the amount of US Dollar depreciation we’re seeing, this lofty goal isn’t out of the question.

But rest assured there’ll be big swings in the silver market between now and then.  Silver is a notoriously volatile metal and will catch many late investors on the wrong side of the market.

Don’t be surprised to see a 20%-30% correction in silver before we see prices at $130.  It’ll be a bumpy ride to those lofty highs.

If you’re not in silver yet, here’s what you do…

I would establish a small position right here, right now.  You can hitch a ride on the silver bull through the iShares Silver Trust (SLV).

But don’t buy too much at first…

If silver decides to enter a correction in coming days, you want to be a buyer at lower prices.  If we get a correction, I would be a buyer at the $40 and $35 technical support levels.

However, if silver breaks $50 in coming days, buy on the breakout.  Then use pullbacks to add to your position.

No matter how you slice it folks, silver is the new hot commodity… and the bull run is far from over.

 

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Category: Commodities

About the Author ()

Justin Bennett is the editor of Commodity ETF Alert, an investment advisory focused on profiting from the ebb and flow of important commodities via ETFs. The commodity veteran and options specialist is also a regular contributor to the Dynamic Wealth Report. Every week, Justin shares his thoughts with our readers on a variety of commodity-related topics. Justin is also a frequent contributor to Commodity Trading Research’s free daily e-letter. And he’s the editor of another highly successful and popular investment advisory, the Options Profit Pipeline.

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