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An Important Development in the Silver Market

By Brian Hunt, Editor in Chief, Stansberry Research
Monday, May 3, 2010

You won't read about it in the mainstream news, but there's an important development taking place in the financial markets right now...
 
Silver, one of the world's most explosive assets, is on the cusp of breaking out to a new yearly high.
 
Last year, when I wrote about rising silver prices, I explained that if all the world's assets were patients in a mental ward, bonds would be the guy who sits silently in the corner and stares out the window. Stocks would be the guy who wanders the hall and mumbles to himself. Silver would be the guy they keep in the padded room all day.
 
You see, silver trades a little like a precious metal... so it moves wildly when people get worried about holding paper currencies. Silver is also an industrial metal... so it can trade up and down with global manufacturing activity. Moves of 25% or 50% in just months are the norm with silver.
 
For the past 11 weeks, Europe's debt and currency crisis has dominated the financial headlines. The global surge in economic activity is also a daily news event. These two developments have sent silver marching from $15 per ounce to $18.60. This is about 60 cents from its high reached last December...
 
 
Many market analysts – my friend Porter Stansberry included – believe silver has incredible upside if we see a major flight away from the Western world's debt-soaked paper currencies. If folks look to silver as a way to store wealth, the metal could run hundreds of percent higher from its current level.
 
We can't know for sure if silver will go bananas soon. But we do know the European debt crisis is in its early stages. We know the U.S. government will do anything in its power to reflate its economy... including using the greatest of its financial powers –the issuance of cheap credit and money. These are bullish factors for silver.
 
The bargain hunter in me makes me hesitant to buy silver at this current level. I'd much rather buy a position on a big pullback. But bull markets have a way of faking you out in these situations. Waiting on pullbacks can make you miss out on the entire move.
 
Given the potential drivers for silver, and the fact that the market is acting strong, I don't mind telling folks who own zero silver (or gold) to buy at these levels. The risk of owning some precious metals at relatively high prices is much lower than not owning any precious metals at all.
 
Good trading,
 
Brian Hunt




In The Daily Crux Recent Articles
Market Notes
Gold and silver run continues... both precious metals up over 2% last week.
 
Big homebuilders gain... 52-week highs for Pulte and D.R. Horton.
 
Occidental Petroleum races to another high... huge oil driller climbs 5% in two days.
 
Earnings today...Clorox, Pitney Bowes, Principal Financial, SYSCO.
Market Watch
Symbol Price
Change
52-Wk
S&P 500 1221.53 +1.3% +10.1%
Oil 38.31 +1.4% -0.6%
Gold 138.07 +2.1% +16.3%
Silver 28.60 +2.4% +53.6%
US-Dollar 80.67 -0.8% +8.1%
Euro 1.32 +0.6% -12.1%
Volatility 18.01 -7.1% -19.8%
Gold Stocks 581.56 +3.0% +17.0%
10-Year Yield 3.02 +0.7% -10.7%

World ETFs
Symbol Price
Change
52-Wk
USA 122.89 +0.3% +11.3%
Canada 30.50 +0.2% +16.2%
Russia 21.94 +1.4% +18.1%
India 37.85 +0.3% +22.3%
Israel 16.69 +1.3% +10.8%
Japan 10.64 +0.6% +6.5%
Singapore 13.73 -1.1% +18.8%
Taiwan 14.78 +0.4% +19.2%
S. Korea 57.31 +1.3% +23.4%
S. Africa 71.87 +1.4% +28.2%
China 44.42 -1.4% -0.6%
Lat.America 53.17 +0.7% +8.4%

Sector ETFs
Symbol Price
Change
52-Wk
Oil Service 137.59 +1.0% +18.9%
Big Pharma 64.14 +0.0% -3.2%
Internet 72.07 -0.1% +23.4%
Semis 16.22 +1.2% +29.4%
Utilities 31.28 +0.2% +1.5%
Defense 18.52 +0.1% +10.6%
Nanotech 10.03 +0.4% +1.6%
Alt. Energy 10.08 +1.3% -3.3%
Water 18.49 +1.0% +14.5%
Insurance 16.14 +0.4% +21.1%
Biotech 20.54 -0.2% +28.1%
Retail 19.70 +0.3% +30.2%
Software 24.79 +0.8% +25.9%
Big Tech 53.87 +0.3% +22.7%
Construction 13.10 +0.9% +15.7%
Media 13.64 +0.5% +26.0%
Consumer Svcs 67.39 +0.2% +24.5%
Financials 55.04 +0.3% +7.4%
Health Care 64.30 +0.1% +2.0%
Industrials 63.54 +0.5% +21.0%
Basic Mat 74.35 +1.1% +25.3%
Real Estate 55.32 +0.1% +25.0%
Transportation 91.77 +0.7% +26.9%
Telecom 22.59 +0.5% +17.8%