I have already written and posted my projections for silver in 2012 along with an analysis for the major events that affected its development during 2011. In this post I will examine the potential outcomes of silver during 2012 along with my estimation of the probability of each scenario occurring.

So what is the forecast for silver prices in 2012?

There are four prime scenarios I think we should consider:

¨      Silver ranging between $30 and $35 by the end of the year (probability of this option – high): This scenario, in my opinion is most likely. It means silver price will end nearly the same price it had reached by the end of 2011. One of the driving forces for silver was speculation around the depreciation of USD due to the QE plans, low interest rates, low return on other investments including US treasuries and stock markets and the rally of gold. The strong relation between gold and silver may have prompted inventors to prefer silver over gold because the former is only less than one fortieth the prices of the latter. Despite these factors, silver didn't do much by the end of 2011; since there are smaller chances of another stimulus plan by the Fed, and the US stock markets and US economy are starting to recover, then silver price is likely to remain at its place. Finally, there is always the possibility that CME will intervene in the markets by raising margins on silver as it did in the past. This potential wet blanket will also keep silver market from heating up;

See here for the complete analysis on silver outcomes.