Silver tipped to soar 500% but can it beat bullion in 2013?

While 2012 has proved a stellar year for the silver price, questions hang over whether the precious metal can replicate this performance and continue to outshine gold as we move into the new year.

Over the course of 2012, the silver price has risen by nearly 20%, outpacing gold’s 10% rise.

While gold is typically viewed as a safe haven and alternative currency, silver is viewed as more of a risk asset, making its price more sensitive to spells of risk aversion.  Conversely, this also means silver is likely to rise further than gold when investors are in risk-on mode.

Indeed, some analysts are backing the latter scenario in the view that monetary policy will remain loose for the foreseeable future, especially following the re-election of Barack Obama in the US and the possibility Ben Bernanke will remain chairman of the Federal Reserve. Such a setting could be a boon for risk assets, including silver.

Ian Williams, chairman of Charteris Treasury Portfolio Managers, believes silver will rise over 500% in three years, based on technical and cyclical analysis rather than a reaction to the accommodative economic situation in the US.

Williams anticipates the precious metal is about to enter a bull market, which will take it from a current price of $32 an ounce to $165 an ounce by the end of October 2015.

So far it has risen from $8 an ounce in 2008 to around $32 an ounce, having peaked at $50 in 2011.

‘We expect silver to continue to dramatically outperform gold as the bull market in precious metals is by no means over,’ said Williams. ‘Our forecast for gold is for a rise to $2,500 but that is small beer to what we expect to see in silver.’

Consequently, he has been shifting the Way Charteris Gold fund away from pure gold mining stocks towards shares that have a much higher involvement with silver.

‘Also within our FTSE 100 equity fund, the Elite Charteris Income fund, we have made Fresnillo [the world’s largest Silver miner & FTSE 100 constituent] the largest holding,’ he says.