Silver set to shine in 2009

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January 18, 2009 by goldguru 

By Kishori Krishnan Exclusive to Silver Investing News

Renewed investor interest in silver, which began in earnest in 2004 and continues today, has ensured that silver price, per ounce, in 2008, averaged a strong $14.98, a nearly 12 per cent increase over the 2007 average price of $13.38; the best average annual price since 1980.

Silver is touted as one of the ten investments to watch in 2009.

Releasing a report on the key developments in the white metal’s fortune, the Silver Institute has underscored the hot pick of 2009. Listed silver stocks have pulled a fast one on their gold peers, and currently represent the best-performing global resources sub sector.

Though Middle East tensions continue to escalate and oil is up another 2.5 per cent again, silver has outperformed even gold in the last 30 days and is trading very well - up nearly 17 per cent versus gold’s rise of 12 per cent. This, despite the degree of international macroeconomic and geopolitical risk that challenge  us as we enter the New Year.

Thirty years ago, the price of silver reached historic highs. At nearly $50 per ounce, the precious metal’s value was unlike anything seen before or since. A variety of factors fueled the skyrocketing prices; the energy crisis of 1979, the weakening of the U.S. Dollar and mounting interest rates all contributed to silver’s impressive value during the period. Today, many of these factors are remarkably similar to what they were in 1979, yet the price of silver has remained surprisingly low. Is now the time to buy silver before the prices rise?

As of January 6, the price of silver was approximately $10.85 per ounce. In October 2008, the price went as low as $9.00 per ounce. Some experts have speculated that similar conditions to those surrounding the high silver prices of 1980 could mean that silver is due for a price increase. For 2009, silver is set to shine - and while the comparatively high prices of gold and platinum have given it a boost, the white metal’s heat goes beyond dollars.

A new Silver Marketing Initiative that officially kicked off on December 3 with a trade and consumer media launch event in New York City has fueled much of the optimism. Not since 2001 has there been a structured marketing effort in place for sterling silver jewelry, says Michael Di Rienzo, executive director of the Washington, D.C.-based Silver Institute.

Analysts aver that silver is massively oversold - probably more oversold than any other commodity or stock market in the world and yet its fundamentals are arguably as sound now as they were before.

Given that silver’s average price in Q1 08 hovered around $18, it is important to remember that silver’s average price in all of 2008 was some $15 per ounce, silver is currently trading at some 36 per cent below its average price in 2008.

The world’s largest silver-backed exchange-traded fund, the iShares Silver Trust SLV.A, has said its bullion holdings rose 1 per cent or just over 55 tones on January 8. The New York-based trust, which issues securities backed by physical stocks of silver, now holds 6,845.6 tonnes of bullion, against 6,790.36 tonnes on January 7.

Time to increase your stock? Investors are advised to conduct their own due diligence before deciding to put money into silver.

Company News

Grenville Gold Corporation (TSX:GVG) has announced that it has converted debt to shares of its Peruvian subsidiary to increase its ownership stake of the Silveria Property near Lima. The transaction was approved by shareholders. “The Silveria Project’s attraction is that it has no net smelter royalty payments”, stated A. Paul Gill, President & CEO, “Also, the continued consolidation of ownership of the surrounding property bodes well for the attractiveness of the Silveria Project in the future.” Grenville has advanced US$ 2,731,944 to the Silveria Project through loans from Grenville to Minera Grenville S.A.C.

Trevali Resources Corp. (CNSX: TV) has announced that ongoing independent metallurgical testing of its high-grade Magistral Norte zone on the Santander mine project, Peru has successfully produced marketable high-grade silver-lead and zinc concentrates. These very positive concentrate results build and vastly improve upon previously announced high recoveries of 84.5 per cent silver, 95 per cent lead and 91 per cent zinc. The concentrate results are critical to the project as high recovery of metal from the ore - to produce high-grade marketable concentrates - has an extremely positive effect on anticipated project economics.

Mag Silver Corp. (TSX: T.MAG) shares jumped 13 per cent to $6.05 on Thursday, on news that a new high grade vein appears to have been discovered as a result of detailed drilling in the vicinity of the Valdecanas Vein, leading to high grade gold and silver, at a new and separate north-dipping vein named the ‘Encino’.

Fortuna Silver Mines (TSX-V: FVI) reported further encouraging drill data from its ongoing in-fill drilling program from the Trinidad Zone of the San Jose silver-gold project in Mexico. Fortuna released results from 33 new holes which are part of a wider 33,000 meter program that commenced in June 2008. Highlights from drilling included several wide zones with decent grades, including 12.2 meters grading 2.8 grams per ton gold and 285 grams per ton silver and 8 meters grading 6 grams per ton gold and 973 grams per ton silver.

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