‘What is happening with Silver?’ you might ask.
In the past few days there has been a $1 jump in price from just over $29 to over $30 and as I write this it is at $30.60. From what I can tell, this is mostly due to a weakening $USD along with weak US economic data. The risk of inflation seems all too obvious to those nervously watching as the FED continues to print more money. This is in my opinion, not the biggest inflation risk. When consumers begin to spend again (which may very well happen if they aren’t paying their mortgages), and borrowing picks up, inflation is likely to get worse. Lending at this point can quickly lead to hyperinflation. When a bank lends money, it essentially creates that money based on its own balance sheet and the ‘miracle’ fractional reserve banking. So most of the cash is still on the banks balance but the money it created now circulates in other banks. With each bank deposit, that same money creates more money. See my post on fractional reserve banking for more info on that.
What does this mean for silver? Silver, as a globally traded commodity will continue to do well as fiat currencies continue to decrease in value. Historically, gold and silver have been a store of value during tumultuous times. As the Eurozone remains unstable, and austerity tensions rise, metals will continue to do well. If the FED remains on the ‘QE path’, inflation will increase and silver will hedge against that.
All this to say, I personally don’t think you have seen anything yet.
Own physical silver if you don’t already.