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Commodities Trading: More profits than gold or oil or…

Posted March 18, 2008

"Most investors are agape at the move in crude oil, but it’s only the 12th best-performing commodity so far this year." — Chart of the Day

by Taipan Chart of the Day

Baltimore – (TFN):  Commodities are entering the next stage of a bull market even as the U.S. appears to be entering a recession — and silver is one of the hottest commodities.

Most investors are agape at the move in crude oil, but it’s only the 12th best-performing commodity so far this year, up 16.58%. Year-to-date, silver is the second best-performing commodity (second only to cocoa), and up 38.67% — more than double the percentage return in gold. 

Going forward, the Federal Reserve and the U.S. Treasury seem determined to hammer the value of the dollar — which is down 35% since President Bush took office — even lower. Since silver is priced in dollars, as the buck goes down, silver usually goes up.

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And when it comes to supply and demand, mine production will probably be pretty flat this year, despite worldwide exploration expenses for non-ferrous metals jumping 33% last year to $9.9 billion.

Years of under-investment in demand are widening the supply/demand gap, especially with growing demand from investment funds that hold physical silver, like the iShares Silver Trust (SLV). According to Lehman Brothers, silver held in funds traded on stock exchanges account for a fifth of annual demand.  As of February 25, these funds held 5,449 metric tons of silver. That’s 192,207,819 ounces.

Finally, the chart shows silver breaking out of a bull flag. Our technical analysis gives a target of $25. Maybe it’s a good time to buy. Find a chart of silver’s breakout patterns and more from Taipan Chart of the Day.

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