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Why Silver Could Shoot Hundreds of Percent HigherBy Brian Hunt, editor in chief, Stansberry & AssociatesMonday, June 1, 2009 Last week, one of the greatest speculative vehicles in the world made an important move... an important "breakout."
The vehicle is the tiny group of mining stocks that represent pure plays on the price of silver.
If all 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...
As you can see from the chart below, silver is prone to fast, incredible swings in both directions. You see, silver trades a little like a precious metal... so it moves wildly when people get worried about a market crash or inflation. Silver is also an industrial metal... so it can trade up and down with global manufacturing activity.
.gif) Okay... so you know silver is crazy. Now realize the firms that focus on silver mining are pure madness. Their profit margins and asset values fluctuate with more volatility than silver itself. Take one of the largest and best-known silver companies, Silver Standard (SSRI), for instance...
When the credit crunch hit last year, SSRI fell from $42 per share to less than $8... a drop of 75% in three months. After people warmed back up to mining stocks, it took the same amount of time to nearly triple in value. Which brings us to where we are now...
 Just last week, Silver Standard blasted out to a fresh nine-month high. The global economy is getting "less bad"... and the incredible bailout plans have most smart people scared to death of inflation. That's driving the price of "real assets" like silver to the moon.
So the next time you're looking around for an "inflation trade," consider going long a company like Silver Standard... or taking a position in the silver ETF (SLV).
If the government's funny money scheme turns out badly, these positions have a long history of providing gigantic gains in no time.
Good trading,
Brian Hunt
Further Reading:
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Silver approaching $16 an ounce, up 67% from November 2008 lows.
Investors losing faith in the dollar... euro up to $1.41, highest point this year.
Dr. copper gains 56% this year on bullish consumer sentiment... heading for fifth-straight monthly gain.
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