A major factor influencing rising investment demand in precious metals often referenced by analysts is the quantitative easing measures employed by The Federal Reserve in an attempt to bolster the US economy. One of the effects of the Fed’s paper-printing policies is the debasing of the US dollar, which makes gold and silver attractive safe-haven buys. A reversal in that policy could have a dire impact on silver prices.
The price of silver has advanced nearly $10 an ounce in the last three months, pushing up share prices for several silver mining stocks.
Alongside gold’s recent record highs, the demand for precious metals as an asset class has helped propel the price of silver to 30-year highs. Many analysts are concerned the price is trading off momentum and not off fundamentals. However, a major firm has raised their price target even higher.
Silver should do well throughout September, and most silver analysts are confident the metal will soon reach the $21 an ounce highs last seen in March 2008.
Some analysts actually expected silver prices to remain bullish this week in anticipation of a weaker dollar. But the greenback flipped the script on the white metal, pushing prices down as low as $17.80 late Wednesday morning. Along with silver prices, one silver miner was breaking investors' hearts as well: Coeur d'Alene Mines.
The news story getting the most attention (and causing the most hand-wringing) this week is evidence China’s economy is cooling after the nation posted a growth rate of 11.9 percent in the first quarter of 2010.
While investment demand will continue to be a driving factor in a healthy silver market, increasing industrial demand is also playing a strong role, according to the Silver Institute’s World Silver Survey 2010, produced annually by research firm GFMS Ltd.
While the price of silver followed gold up and up this month, teasing analysts and investors with hopes of breaking past $20 an ounce, the sometimes precious sometimes industrial metal fell hard the past two days.
The market had second thoughts about the positive implications of the euro zone loan and worries over the depth of Greece’s debt problems resurfaced this morning, putting the breaks on the precious metal mini bull-run.
When precious metals prices got a boost from the dollar’s losses Monday, silver shot up nearly 3 percent while gold barely moved up less than a quarter percent from Friday. Silver’s industrial side is partly responsible for its continued outperformance of gold in the precious metals market.
Tuesday, January 11, 2011