-- Posted 18 September, 2010 | | Discuss This Article - Comments:

Back to school for some, the days before hunting seasons for others, but for silver investors, this time of the year is nothing more than silver season – the time when silver skyrockets to finish out the year.

Well Defined Trend

Excluding 2008, spot silver prices have typically soared in the last three to four months of the year.  In 2006, silver added more than 13% in the last three months of the year.  In 2007, silver tacked on nearly 50% in the last four months of the year.  In 2009, silver gained 20% from September to the first of January.  Thus, with this trend clearly still on, you should be buying.

Never Too Late

There is never a bad time to buy into an investment that beats inflation, hedges economic downturns, and consistently edges higher as governments do what they do best: ruining otherwise functioning economies. 

Perhaps differently than any other of the past four years, silver prices have even more momentum behind them due to the closure of investment bank proprietary trading desks.  These trading outfits, which combined hold more silver shorts than any other entity in the world, will have to cease their manipulative selling, and the seasonal rally that is normally underway will enjoy even greater momentum.

Premiums are Soaring

Clearly, coin shops and online brokers are expecting an incredible run in silver prices through the end of the year.  Normally heavily discounted outfits, those that sell silver in bulk and typically have the best prices as a result, are pushing premiums on foreign sovereigns as high as 15% on smaller orders.  Likewise, small bars and rounds have moved to premiums of anywhere between 5-7% depending on the age (new or secondary market) and the dealer. 

Institutional Demand Rising

The increased demand for silver, or silver trackers, isn't just coming from collectors and small time investors.  The SLV ETF, a popularly traded silver ETF for retail and institutional investors, had the second highest inflow receipts of the more than 900 exchange-traded funds through the month of August!  That fund, now one of the biggest players on the exchange-traded fund scene, accepted $6.7 billion in new interest just this year. 

Get in Now

History suggests that while August and September are generally the two best months for silver, the three following months prove to further compound the gains.  In three of the last four years (the financial crisis of 2008 took metals for a spin!), silver has continued to climb in the last three months in the year, even after following superb gains in August and September. 

If history and past performance proves to be a solid indicator (it has performed relatively well thus far), silver investors should be in for a gain, no matter when they purchase in September.  Silver prices always rally well beyond their September highs.  The best gains will be made on junk and pre-1964 silver collections, where the premiums have yet to rise to reflect the great capital appreciation that is just around the corner.

Dr. Jeffrey Lewis

www.silver-coin-investor.com