Bank of America Predicts $50 Silver

05 Aug

Bank of America Predicts $50 Silver

One of America’s leading banks now says silver could be headed to $50!

It’s not the forecast itself that surprises us.  After all, silver has been at $50 twice, in 1980 and again in 2011.

We don’t think silver at $50 is a stretch at all.  We think that it is a rather modest forecast.  After all, since the dollar is losing value all the time, like a ruler of 12 inches last year, 10 inches this year, and eight next year, we have to ask what is today’s equivalent purchasing power of $50 in 1980.

It’s more than $153!

In other words, a forecast for silver to reach $50 soon is still less than a third it’s real all-time high.

But we want to make sure the record is straight and not misleading.  Silver reached a high of $50 in 1980 under very special circumstances.  That was when the billionaire Hunt brothers, along with some other international players, we’re trying to corner the silver market.  

That drove silver higher than it might have otherwise gone, so we want to give you a better comparison.

Silver came close to $50 again nine years ago.  So, in real purchasing power, or what economist call “constant dollars,” silver would have to reach $57 today to equal its 2011 high.

Now Bank of America, the nation’s second largest bank, writes that silver could rise to $35 next year, and rally to $50 in the medium turn.

Bank of America has been surprising the markets with its acknowledgement of the precious metals bull market.  In April BofA, the nation’s second largest bank, raised its target price for gold from $2,000 to $3,000.   It said then, “As central banks and governments double their balance sheets and fiscal deficits respectively, we have also decided to up our 18-month gold target from $2,000 to $3,000 an ounce….”

“Another important point to remember,” according to the report, “is that, just as central banks are socializing risk in financial markets, governments are increasing their spending like never before during peacetime. Fiscal spending plans across developed economies are nothing short of breathtaking whether we look at them in dollar terms or as a percentage of each nation’s GDP.”

The Federal Reserve can’t just print gold like it can dollars, Bank of America concluded.  We couldn’t have said it much better.

The bank’s call for higher silver prices rests not just fiscal and monetary grounds.  Its analysis takes note of so-called “green” initiatives in Washington which could drive new industrial silver demand, especially for solar power applications.  BofA writes, “The last time this happened between 2006 and 2011, the precious metal rallied to $50 an ounce, a price level we would see within reach this time around as well.”