Long-time silver investors are well aware that this isn’t the best time of year for precious metals as gold and silver prices trade sideways to lower, hitting bottoms by mid-August. Despite the depressing name, the summer doldrums do offer a ray of sunshine.
Silver is an extremely rare metal only occurring in igneous rock at a concentration of only 0.07 parts per million. For comparison, copper is approximately 785 times more prevalent. Due to its rarity, the main concern in gauging the potential value of a silver deposit is the amount of metal present.
While the contagion of fear in the markets is providing silver with a much needed boost this week, ongoing economic problems around the world will eventually weigh on industrial demand.
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 news wires are all a buzz with the most recent scoop of Wall Street: JPMorgan’s investigation by the Department of Justice and the Commodity Futures Trading Commission over allegations of manipulating the silver market on the London Bullion Exchange and NYMEX.
The European (and in fact, the global) financial crisis is far from over and will continue to influence the precious metals (and industrial sector) for some time to come. Whether silver will react positively or negatively over the long-run still remains to be seen.
When ETFs were first introduced to the marketplace a decade ago, they opened up a whole new world of investment opportunities. Now New York-based Global X Funds has extended those opportunities even further. Tuesday, Global X launched the world’s first silver miner exchange-traded fund, Global X Silver Miners ETF (SIL).
Precious metals prices returned from Easter Break with a bang. Despite the dollar remaining in the green Wednesday, silver took direction from the industrial side of the market and, like gold, rose along with platinum, palladium and copper prices.
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, July 20, 2010