What's Moving the Silver and Oil Markets Right Now

Concern over a power struggle in Libya has sent precious metals soaring. Right now silver is trading at more than $33 an ounce.

Investors tend to flock to precious metals like gold and silver in times of conflict, and unrest in the Middle East is certainly a major catalyst moving the markets right now.

Part of the issue is that Libyan Leader Muammar Gaddafi has recently called on supporters to defend the government by fighting anti-government groups, which have joined with defecting army units.

The unrest in Libya follows closely after the riots in Egypt - as you can see in the Google (Nasdaq: GOOG) image below, both countries are in the northern part of Africa, and events within their borders have serious implications for the world's oil market.

The clashing groups are a potent mix in Libya - Africa's most oil rich country. The fact that disruptions in the region could affect oil supplies is helping to push oil prices higher too - crude oil for April delivery has shot to around $96 a barrel - a two year high.

***With silver and oil prices moving higher investors are likely wondering if they should add exposure to silver, and if so how.

The answer is absolutely yes - investors should be buying silver - but on the dips. And not just because of what's going on in the Middle East. Investors that add exposure to silver in the seasonally weak months at the beginning of the year are likely to be sitting on profits within 6 months. The added boost from Libya is just another catalyst that points toward the need for investors to have exposure to silver.

Peter Barnes, CEO of Silver Wheaton SLW, one of the larger silver miners, recently said in this Reuters story that the metal could hit $50 in the next three to four years.

***Precious metals trading can be frightening at times, with significant ups and downs in the spot market. For those who don't have the stomach for silver bullion's roller coaster market, there is a better way to play the trend - silver mining companies.

Mining companies typically see their stocks rise more than the price of silver because as the price of the metal increases, their margins rise even more. That's because costs are usually fixed, although they do increase as production ramps up to meet demand. Even with a moderate bump in cash costs, these companies tend to book huge profits in bull markets for precious metals. And shareholders book huge gains.

I recommend that investors consider silver mining stocks rather than bullion. What I like about mining stocks is that as the price of silver goes up, their cost structures remain the same, increasing their profitability.

Three great silver opportunities are in my special report, Sierra Madre Silver Profits. We recently booked a 62 percent gain on half of one of these positions, and are ready to add back shares if the stock pulls back again. The other two stocks in the report are buys right now.

Disclosure: Ian Wyatt begin_of_the_skype_highlighting end_of_the_skype_highlighting begin_of_the_skype_highlighting     end_of_the_skype_highlighting owns shares of GOOG and SLW in his personal investment account.