Silver has been on a tear this year. Some analysts think that we are at the early stages of a silver recovery, with price targets north of US $30 an ounce being bantered about. Mind you, many of those same analysts think gold will top $2,000 an ounce as well.

Personally, I think the silver rally has more legs. Mainly because I think of silver as an industrial metal, like platinum and palladium. Which means this rally reflects rising demand in anticipation of an impending economic recovery. Not concerned over inflation at some point in the future.

Additionally, the increase in demand for silver is coming at a time when supplies are waning. Normally, supply demand imbalances lead to higher prices. But as we have learned all too well, the current economic climate is anything but normal.

If you buy into higher prices for silver, you should look at companies that will provide you with the best exposure. One that comes to mind is Pan American Silver Corp. (TMX: PAA, recent price $25.58).

Options on PAA trade on the MX, with expirations in June, July, September and December. Aggressive traders might look at buying July 25 calls at $2.20 per share (implied volatility 49%).