A combination of uncertainty in the global economy, political unrest in the Middle East and North Africa, limited supplies and a growing demand from emerging markets could poise silver prices to break out to new highs. China, in particular, has been showing a large appetite for investments in both silver and gold.
“It has certainly been volatile, and it seems like there could be a potential shortage of silver in the offing. It touched $34 [an ounce], now you’re starting to hear more and more people say that $50 silver isn’t that far off and it’s not that far off because of things like emerging markets and demand for silver as a store of value,” said Chris Berry, founder of Mountain House Partners, who specializes in the commodity space and the evolving geopolitical relationship between emerging and developed economies.
China, which has historically been a net exporter of silver, imported a full 14 percent of global silver production in 2010. On top of a growing mineral stockpile, China’s foreign-exchange reserve – the largest in the world – holds some $2.5 trillion US.
“You have the Chinese sitting on a store of $2.5 trillion US of which they know is completely useless, so I think they are looking at gold, but also at silver as a store of value and a way to hedge against the decline of the US dollar,” said Berry in an interview with Silver Investing News.
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