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How High Will Silver Prices Go in 2011?

ByAlix Steel,

(Silver prices poll updated with comments from Silver Panther ceo Bob Archer.) NEW YORK (TheStreet ) -- Gold was the hot metal in 2010 but silver has grabbed the early lead in the race to be 2011's precious metal winner. As gold prices struggle to break through to and hold new highs, contending with a gloomy triple top, silver prices are on a tear, reaching 30-year highs, up 11% already this year. The metal settled at a high of $32.86 an ounce Tuesday after hitting an intra-day 30-year high of $34.33, but these levels are still a far cry from their $50 record. Silver hit an all-time high of $50 an ounce in 1980 after the famous (or infamous) Hunt brothers bought the metal aggressively for 7 years; at one time owning more than 200 million ounces of silver. The silver bubble burst soon thereafter, shedding 50% of its value almost immediately, and over the last 30 years the metal has traded as low as $4. The appeal of silver is three-fold. First, it's the "poor man's gold," but performs the role of a hard asset, a form of money that retains more value than paper currencies. Silver, like gold, is also a safe-haven asset. There's been a lot of safe-haven headlines of late with the explosion of violence in the Middle East, rising food prices, riots, inflation, conflict between North and South Korea, and high unemployment.

Vote: Where will gold prices finish in 2011?

Silver is also an industrial metal, with about 60% of its usage coming from the sector, which makes the metal a good play on a global economic recovery. Experts say, however, that industrial demand will not likely be as big of a support to higher silver prices in 2011 as it was in 2010, forcing investment demand to pick up the slack, So far, no problem. The iShares Silver Trust has added 113.88 tons in February as traders jumped in. There have also been rumors that Asian buyers were gobbling up shares of the SLV in order to take physical delivery, which they have to do in 50,000 share lots. Backwardation in the futures market, where the spot month price is higher than the future months, points to a supply crunch and has been a green light for some traders that silver is headed higher. David Morgan, founder of Silver-Investor.com, says he could see silver prices as high as $45 in 2011 "and if things get really crazy we could go beyond that." Jeb Handwerger, editor of GoldStockTrades.com, sees $40 silver on the back of Middle East unrest. Phil Streible, senior market strategist at Lind-Waldock, is a bit more conservative expecting a silver correction to the $31 level. Long term for 2011, however, Streible still sees $39-$42 silver. "It's just not going to be in one shot ... unless some significant supply and demand structure changes ... I think we chop our way up there," he says. Bob Archer, president and chief executive officer of Great Panther Silver , told TheStreet that he expects silver prices could crest $40 this in 2011. "Silver is, for the first time in a long time, starting to get in the mainstream of investor awareness," said Archer. "Silver is a tiny, tiny market. The more money that flows into a tiny market, the more the price shoots up." The expert traders have weighed in and now we want to know what you think:

--Written by Alix Steel in New York. >To contact the writer of this article, click here: Alix Steel. >To follow the writer on Twitter, go to http://twitter.com/adsteel. >To submit a news tip, send an email to: tips@thestreet.com.

Where will silver prices finish 2011?
Under $30 an ounceBetween $35-$40 Between $40-$45Over $50