The $80 Silver Call

The Devil’s Metal Beyond $50… The $80 Silver Call (SLV, SIVR, AGQ, SLW, PAAS)

Posted: April 28, 2011 at 3:23 pm

The recent rise of silver and gold is hopefully the last wave of the new buyers hedging against inflation and buying protection against uncertainty in hard assets over paper money.  Sadly, that might not be the case at all.  New asset buying has literally driven the sellers away.  A large silver pullback this week barely lasted and now we have the Devil’s metal back above $48.00 per ounce.  One research call this week and one event may be the driving force, and there is a call for $80.00 silver.

A report this week from Bank of America Merrill Lynch is calling for the possibility of $80.00 silver.  Be advised that this is a technical research piece more than a fundamental forecast.  Sometimes technicals match up with fundamentals, and sometimes they become runaway… Our interest is how it would impact the silver stocks out there as well as how it would impact some of the key ETF products.  What is interesting is that this comes on the heels of the iShares Silver Trust (NYSE: SLV) filing to sell up to almost $2.2 billion in new trust shares to buy more silver as demand remains high.  Silver at $80 would probably generate a move in the iShares Silver Trust (NYSE: SLV) to $78.00 or more if the move is fully up to $80.00 per ounce.  

We would also look for a $78-ish handle on the ETFS Physical Silver Shares (NYSE: SIVR) exchange-traded product.  Imagine what $80.00 silver would do for the double leverage ProShares Ultra Silver (NYSE: AGQ) exchange-traded product.  Due to intraday and future contract tracking, the number is harder to peg but that could easily be over $700.00 per share if that occurs.  Pan American was just raised to Buy with a $48 target this week at Jefferies.

Read more: The Devil’s Metal Beyond $50… The $80 Silver Call (SLV, SIVR, AGQ, SLW, PAAS) - 24/7 Wall St. http://247wallst.com/2011/04/28/the-devils-metal-beyond-50-the-80-silver-call-slv-sivr-agq-slw-paas/#ixzz1KsgBr1Em




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