With Rising Inflation The Silver Price Will Soar in 2013

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Federal Reserve Continues to Print Money at Rate of $85 Billion Per Month as Widely Expected, Barclays Holds Silver Estimates for Next Year Unchanged at $32.50 Per Oz, TD Ameritrade Calls for 25% Higher Silver Prices in 2013, UBS Expects Higher Silver Prices Next Year.

With Rising Inflation The Silver Price Will Soar in 2013Santa Claus has been conspicuously absent from the silver markets so far in this festive holiday month of December. What may come as a surprise to you is that there is not a valid fundamental reason for the Santa Clause rally’s disappearing act in the precious metals complex.

Silver declined another dollar per ounce in the week that ended Friday, December 14th. Even though the Federal Reserve announced its continuing quest to print a limitless quantity of greenbacks for the present and foreseeable future, Barclays maintained a supportive price forecast for silver.

TD Securities called for substantially higher silver prices in 2013, and UBS argued for higher silver prices next year, the white metal managed to decline from its spot market open of $33.22 down to $32.28 by the spot market close this past Friday.

Federal Reserve Continues to Print $85 Billion Per Month

Silver’s reaction to the Federal Reserve’s monthly FOMC meeting decision left many silver enthusiasts scratching their heads genuinely perplexed. The meeting that commenced last Tuesday and ended last Wednesday extended the Fed’s so called bond buying program and maintained their commitment to buy $85 billion per month in purchases of Treasuries.

Even though the Fed will no longer sell $45 billion per month of longer dated Treasury holdings to offset this, which means that they are now actually printing $85 billion per month in new dollars out of thin air, silver barely budged. The answer to this riddle lies in the fact that the Fed did exactly as the precious metals markets were already anticipating.

Silver detractors argue that this means the precious metal had already priced in the additional money printing that now amounts to over $1 trillion per year in brand new paper.  Over the medium to long term, the announcement is still bullish for silver, so stay tuned to see how this plays out in silver prices in the future.

Barclays Holds Silver Estimates for 2013 Unchanged at $32.50 Per Oz

Much of the consequential news for silver during the rest of the week came in the form of three major investment groups updating their forward price estimates for the white metal. Barclays was the least bullish of the three, yet their updated silver prognosis also supported silver at current levels.

Barclays holds their 2013 silver price prediction at $32.50 per ounce, just above where it closed last Friday. While this is not much of a bullish call, it did help to keep a floor under silver prices, especially ahead of that important $32 per ounce support line.

TD Ameritrade Calls for 25% Higher Silver Prices in 2013

TD Securities, the sister company of TD Ameritrade online investment brokerage, offered an extremely bullish assessment of silver prices for 2013 this past week. They expect silver to be among the star performers of commodities next year, alongside platinum and palladium. TDS anticipates that silver prices will average $40.52 per ounce for the year. This means that prices would have to rise above $40.52 for at least a good part of the year in order to help lift the low $30’s per ounce end of 2012 price up to that level for the next year’s average.

TDS gives several strong reasons for why they expect silver to rise over 25% next year. They believe that there will be constraints on silver supplies in the new year. They also see an industrial demand that only grows as the year progresses. Besides this, TDS anticipates that a fear that inflation will rise as the Federal Reserve continues to grow its monstrous balance sheet will also drive people into silver and gold as the ultimate inflation hedges. By the end of the year, TD Securities expects to see silver reach as high as $44 per ounce and to outperform gold as well.

UBS Also Expects Higher Silver Prices Next Year

UBS rounded out a week of solid forecasts for silver when they issued their updated price estimate for the white metal for next year. The Swiss banking giant predicts that silver will rise to a solid $36.80 per ounce in 2013. This represents a full fourteen percent price appreciation from where silver spot markets closed this past Friday.

UBS gave silver an even greater shine when it stated that it will outperform the other commodities in the complex because of the easy monetary policy environment. They look for silver to rise along with the Fed’s QE money printing prowess so long as there is not a substantial risk off, black swan event. Investor demand will be the key to moving silver prices higher, more so than supply and demand fundamentals, the Swiss bank claimed.

Take Away On Silver Market Prices

Silver endured another tough week this past five day period as it dropped a substantial dollar per ounce. Despite the fact that the Fed’s money printing party continued with full and unabated enthusiasm, and that three investment banks upped the ante on silver prices for 2013, the white metal still struggled to hold its footing.

From a technical stand point, silver has not suffered catastrophically. Importantly, it affirmed the major $32 per ounce price support point when it closed the spot market week at $32.28. So long as silver can keep its head above that important water line mark, it should be able to hold its recent $32 to $35 range for the foreseeable future until some more bullish fundamental news comes riding to the white metals’ hoped for rescue.

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