Is Silver Ready to Rebound?

Investors are looking for safe haven assets, especially while the fate of the Euro zone is known. Silver prices and exchange traded funds (ETFs) could have a volatile year, as investors continue to flip-flop from one safe haven to another. Silver prices are hovering around $30 an ounce after climbing to about $50 last year. This could be a prelude for the potential volatility that silver could experience in 2012. If the euro begins to show weakness, silver prices could rise on demand. Silver is likely to remain volatile in price because as the European drama wages on, investors will likely constantly on the run in between what is perceived as “safe” investments (Euros or silver). Silver can give investors the similar hedging characteristics that gold has but at a very low cost. Investors to look at silver shares and ETFs such as the iShares Silver Trust SLV, PowerShares DB Silver Fund DBS and ETFS Physical Silver Shares SIVR. Shares of Sprott Physical Silver Trust PSLV were down 9% last week, after the exchange traded fund announced a follow-on offering, the proceeds of which will be used to purchase silver bullion. Since it is a closed-end fund, Sprott Physical Silver Trust can trade at a premium or discount to net asset value. If you have missed to notice: Gold's ratio to silver — the number of silver ounces needed to buy an ounce of gold — slipped to two-month low on last Friday at 52 as silver prices outperformed gold. There is no evidence to suggest that anything we've seen so far was the end of the silver bull market. Short-term financial gain is possible with a silver investment, however, due to its industrial applications; the metal is more sensitive to economic highs and lows. So keep an eye on silver.