Tuesday, November 16, 2010

Embry- Silver to hit $100/oz

The silver price could reach $100/oz in the next two years, almost four times its price on Thursday, Sprott Asset Management chief investment strategist John Embry said.

Toronto-based Sprott last week launched its first physical silver trust on the TSX.

"We think that silver is an idea whose time has really come," Embry told Mining Weekly Online, adding that the price of the metal is likely to outperform gold in the near term.

He said silver might top its previous all-time high of $49,50/oz, reached in 1980, over the next 12-months, as the US government prints more money, flooding the market with liquidity.

Even if the global economy were to move into recession again, Embry forecast silver would rise in value.

"Quantative easing would accelerate at a rapid pace. There would be an overwhelming increase investment demand."

The price of silver has risen from around $17/oz at the beginning of the year to $27,50/oz on Thursday.

Embry said investors also stood to take advantage of these gains through silver stocks. His top pick is TSX-listed Silver Wheaton, which buys silver from miners that produce it as a byproduct - Embry calls this company the "crème de la crème".

His other pick is Bear Creek, which has projects in Peru.

On the gold side, Embry believed South African miner Gold Fields was set to benefit from increased international exposure.

Embry said the company had massive reserves, and the gold price would ultimately outrun the rand.

He predicted the gold price would top $1 500/oz by year-end, and $2 000/oz in 2011.

Gold was trading at $1 402/oz on Thursday.

Canadian junior Westdome Mining, which operates the Eagle River mine was trading at a "dramatic discount", making it his top choice for a junior gold stock, Embry said.

He went on to say that gold stocks were looking more attractive than their product at the moment.

"Shares have lagged. If you get the move in bullion, it will have an outsized impact on producers' share prices," Embry said.

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