2013 with a Silver Lining - Part 2

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Silver will shine, Oil will burn out


Silver has always been regarded as gold’s weaker brother. But the white commodity might steal gold’s shine for 2013 due to a number of factors. Gold has risen 580% since 2001, but silver has risen 725% over the same period. If silver has already gone up more than gold, why should their rises continue at a similar pace in 2013? Because silver has always exaggerated the movements of gold, in rises and falls, therefore an increase in gold prices in 2013 should  lead to an even greater growth for silver. Demand for silver globally is likely to increase, especially within emerging markets, which use the commodity for a variety of industries such as auto-mobiles, construction and electronic gadgets. The global economy is still showing signs of recovery, therefore the current price of the white commodity at $34 can still be regarded as cheap, and rise to $45 by the end of 2013 is more than possible.


Oil prices have risen 200% in the past four years alone. Brent Crude was $40 in 2008 and it was recently trading above $120 in August 2012. This kind of rise is unsustainable. Oil prices are surely due a drop in 2013. Why? Oil is now being found in new regions such as Falkland Islands and, as a result global supply, is likely to outweigh global demand, which should drive down prices. Emerging markets’ demand has played a pivotal role in high oil prices, but as economies such as China experience a cooling off period, the demand levels will also diminish. Oil prices may drop to $80 in 2013, as they revisit the downs-trends of 2008.


No more ‘Pax Americana’, the theory that combined American economical supremacy with a generic, undefined peace. China will become the biggest economy in the world in 2030. The United States will lose their leadership, while the EU, Japan and Russia will face a relative decline. Asia will increase sharply its economic and military power, while Europe as a political union will break up under speculative attacks and divisions among its weakened members. To one side a Baltic Europe dominated by Germany and surrounded by its economic satellites. To the other, South European countries devaluing heavily their currencies and coping with their mounting debts.

With contribution from Jagdip Cheema, a fellow journalist working for ADVFN.


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