Your Ad Here

Thursday, June 4, 2009

Silver Flirts with $16 Mark: Where Will It Trade from Here?

Silver, which has topped gold and platinum to become the fastest rising precious metal this year, has a chance to keep outperforming thanks to its double use as both an inflation hedge and industrial material, analysts are forecasting.

But with higher returns come greater risks. Silver has proved much more volatile than gold, partly because fewer people trade the white metal than gold.

If "prices of precious metals turn higher across the board, silver will tend to move up faster," said Neil Meader, research director at London-based precious metals consultancy GFMS.

"If all the prices come off, you will see silver prices collapse much faster," he said.

The London fixing, a global benchmark for silver's spot trading, has rallied nearly 50% this year to near $16 an ounce, the highest level in 10 months, as investors piled into coins, bars, and silver exchange-traded funds such as iShare Silver Trust. Holdings in SLV ishares Silver ETF, hit a record high this week.

The year-to-date gain in silver easily outpaced gold's 12% advance and has also outrun platinum's 30% increase.

Monday's metals trading on the COMEX featured anomalous action in gold and silver. Last week, silver, as reported in "Silver Breaks Out, Aims for $17," punched through resistance with a lot more vigor than gold. The metals followed through yesterday with disparate results. The active July silver contract finished more than 12 cents higher at $15.735. Nearby June gold, however, gave up 20 cents to settle at $978.60.

Disclosure I am long both SLV and GLD shares

1 comment: