Silver Slips by Unnoticed
November 11th, 2008 Posted in Commodities, Market Analysis, Silver
With all the excitement surrounding the financial crisis, silver has taken a back seat in the commodity-trader’s consciousness. But quietly, behind the scenes, silver bullion is being increasingly accumulated by savvy investors around the world.
If you trade silver, you need to watch gold and anything that influences gold prices as the two markets tend to move together. The most important factor for the prices of both commodities is the government economic indicator reports, such as monthly Consumer Price Index, Gross Domestic Product (GDP) and Producer Price Index (PPI). These are figures which measure the inflation rate and a country’s economic growth.
Silver has been one of the most volatile of all the major commodities. It doesn’t take much capital to move silver since its market is so small, and speculators flock to this volatility.
Silver rose around 3% today as a fall in the USD against its major counterparts increased the commodity’s demand as an alternative asset, but further buying was capped by uncertainty over the global economic outlook.
Silver has more than halved from an 18-year high in March after hedge funds and speculators sold commodities and precious metals to raise cash amid the global economic slowdown. Silver may not rise above $15 an ounce in the next three months as industrial use is curbed by the deepening credit crisis. Crude oil prices also tend to benefit gold and silver because the precious metal is often bought as a hedge against oil-led inflation, and because they support interest in commodities as an asset class.
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