For nearly a decade, rising investment demand for silver — from coins to futures to exchange-traded funds — has been the primary driver behind a bull run that has taken silver prices from a meager average of $4.85/oz to highs not seen in 30 years.
Since the 2008 crash, investors have counted on continued central bank quantitative easing measures to devalue global currencies and push
and silver prices higher. Now, many analysts are once again
to massive liquidity expansion and the resulting currency devaluation to drive safe-haven investment in precious metals.
Silver guru David Morgan said he expects investment demand growth to continue in 2013 for two reasons: Ongoing economic uncertainty will push big-money investors and financial institutions toward hard assets like precious metals, driving up the cost of gold. In the face of rising gold prices, retail investors will be drawn to silver's relative affordability.
Morgan is confident that silver will hit $50 an ounce in 2013.
Industrial demand a factor for silver in 2013
The silver market's historical proclivity for wide upswings and even wider downward spirals has earned it the moniker “the Devil's metal.” At the start of 2012, silver investors were warned to expect more of the same. Silver is a much smaller market compared to gold; that and its dual nature as both a precious and industrial metal are responsible for most of the white metal's volatile and unpredictable price performance.
Silver's stellar performance in the first quarter of 2012 gave hope to many a silver bug that the precious metal was on track to reach its record high of $50 an ounce for a second year in a row.