iShares Silver Trust (SLV), Silver Wheaton Corp. (SLW): Is Silver in a Bubble?

Groupthink. The final common feature of a bubble that bears mention is the tendency of investors to suffer from the blind need to think alike. The good news for silver bulls is that the news has been fairly balanced of late, on both a commodity- and company-specific level. While many institution traders are focusing on bearish outside markets — specifically falling crude prices and a strong U.S. dollar — news from the Fed is mixed.

As I recently discussed, Chicago Fed Chairman Charles Evans made mention of the fact that the Federal Open Market Committee may be able to raise rates before expected. A careful reading of his comments, however, suggests that the remark was aimed at the precious-metals markets — his detailed analysis suggests the Fed will not move rates until well into 2015. The point is that there is a healthy debate at work and groupthink is decidedly missing.

The conclusion
While this isn’t a exhaustive list of the features of bubbles, it includes some of the most important signals and offers some reasons silver doesn’t currently qualify as being in a bubble. Silver has enjoyed an extended positive run, but there doesn’t appear to be reason for huge concern. The major macro factors remain neutral to positive, and I think silver has plenty of upside remaining.

Fool contributor Doug Ehrman and The Motley Fool have no position in any of the stocks mentioned.

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