The correction in silver prices has not shaken investor confidence. In fact, bullion investors have stepped up their purchases this year. With just under two months still remaining in 2011, sales of the American Silver Eagle have already surpassed the record level of 2010 with sales of 36,375,500 ounces. If sales of the Silver Eagle for November and December match the levels of 2010, total sales for 2011 should total over 42 million ounces or more than 20% above the record breaking sales level of 2010.
Investors also appear to be wising up to the manipulation in the silver market as weak hands strengthen. This is evidenced by the fact that some of the strongest sales months during 2011 were during the sharp sell offs. Rather than panic, sell silver positions or move into cash, investors stepped up their purchases of silver eagles coins to take advantage of the depressed prices.
Furthermore, technicals have turned bullish for silver recently after bouncing off support at the bottom line of the trend channel show below. There is very little downside with a huge amount of upside potential, highlighted in the green rectangle below, should silver begin to gap up.
With physical demand remaining robust and investors seeking safe-haven investments in the face of the Eurozone debt crisis, I believe we could still see silver break above $50 by year-end or during Q1 of 2012 at the very latest. I have continued stacking at these severely discounted prices and believe that anything under $50 silver will look cheap in the near future.
While physical bullion in your possession should be secured first and foremost, silver stocks appear to be the better value at the current time. While silver is up roughly 10% in the past 30 days, Silver Wheaton (SLW) is up 23%, Hecla (HL) is up 28%, and Cour dAlene (CDE) is up 28%. Watch for mining equities to end the year very strongly, marking a return to offering leverage to the advance in their respective underlying metal.