Silver Bullishness Driven by Fundamental Evaluation and Momentum Players
Michael James McDonald submits:
This article will try to frame and explain silver (and gold) in a way that better tells us what it’s doing and why it’s doing it. It will try to answer how much of silver’s current price is a rational adjustment to inflation and how much is created by the excessive enthusiasm of momentum players.
Like all commodities, silver doesn’t produce any cash flow like stocks or bonds, so it has no intrinsic value. Its price is simply the number that balances supply with demand at any given moment. The core demand for silver comes from ongoing industrial and jewelry needs. The supply comes from mining. For the last five years, the price that balanced supply with demand fell consistently between $10 and $18 per ounce. Over time, silver’s price, like most commodities, should also rise with inflation, but this hasn’t been much of a factor sinceComplete Story »