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Silver breaks key $37 resistance level opening way to $50 an ounce again

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February 29, 2012 - 10:17am

Silver prices have broken decisively out of the $33-34 an ounce price range of the past couple of months and punched decisively higher breaching the resistance zone of $36-37 an ounce.

In terms of the technical charts there is nothing now to stop silver advancing fairly rapidly, beyond its old all-time high of $50. Silver got close to this level last April but failed to clear this hurdle.

32-year record

Breaching an all-time high, even one set 32 years ago is always a big deal for a commodity. As we saw last April the risk is always that the price runs out of support at this level. So much hot air is expended by analysts like this one in the run up that the fall can be quite sharp.

However, once the all-time high is breached decisively the upside is quite something. For example it took gold several attempts to pass the $1,000 mark not so long back – and doubters said that was it for gold – and look where the yellow metal sits today at $1,789 with $2,000 squarely in its sights.

For silver to pass $50 an ounce and head higher it needs more than buying by individual investors frightened by global money printing. It needs institutional support from the hedge funds and sovereign wealth funds.

Hedge fund interest?

Next week ArabianMoney editor and publisher Peter Cooper is chairing a panel on commodities at the Middle East Investment Summit held in conjunction with the Hedge Funds World event in Dubai (click here) and it will be interesting to hear what the expert panelists have to say on silver. He will of course ensure that the most ignored of the precious metals at least gets a mention.

Silver is after all the standout winner in the commodity space so far for 2012, up an amazing 36 per cent from its December low (and 80 per cent for the ArabianMoney newsletter’s favorite silver investment vehicle):

Is this sustainable? Well silver blew itself out in a mini-spike last April and some said it was all over then. Silver is certainly making a comeback. It just remains to be seen if a new star is born or whether silver fluffs it again.

Those readers interested in silver investment should get a copy of the latest ArabianMoney newsletter which contains advice on how best to actually buy the stuff and more analysis on this very profitable asset class (subscribe here).

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About Peter Cooper / Commentary Author

Peter Cooper is the editor and publisher of the ArabianMoney investment newsletter and the popular financial comment website www.arabianmoney.net.

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