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Will Silver Continue to Shine?

Adam J. Crawford
August 24, 2011

Gold dominates the headlines, but many investors are beginning to set their sights on silver as it creeps back toward its nominal high of $50 an ounce. So what's behind the spike in silver prices and will the momentum last?

Silver in high demand
Silver is a multipurpose metal used in many industrial applications. It's also a popular store of value to which investors flock in times of uncertainty. Evidence suggests both are contributing to the rise in silver prices.

The U.S. Mint reported all-time record sales of silver eagles in the month of January. The surge in demand has even prompted eBay (Nasdaq: EBAY  ) to devote a portion of its site to the precious-metals trade in order to satisfy demand from individual investors seeking an inflation hedge.  

China is also on a silver spending spree in order to meet its industrial, retail, and investment needs. The increased demand has actually turned China from a net exporter to a net importer of silver. Some have even speculated that China is taking a rather large position in the iShares Silver Trust (