Rise fuelled by a rush into gold on economic worries.
Gold is moving closer to its all-time high, while silver prices saw their all-time high in the Indian market on Thursday. In Mumbai, silver prices went up by Rs 500 to close at Rs 30,760 per kg.
Internationally, silver was trading at $19.10 an ounce. Its highest price was seen on May 3, 2008, at $20.815. On Thursday, gold moved to Rs 18,970 per 10g, up Rs 55 from yesterday. It is just Rs 70 away from its all-time high.
In the past four days, silver went up by 3.4 per cent, while gold was up 1.25 per cent in Mumbai’s spot market. A lot of interest has been seen in silver in recent days after gold started rising; silver was cheaper and its prices have gone up faster since Monday. The gold to silver price ratio is 65.06; it was 67 two months earlier. Prices in the international market are moving up on safe-haven buying and weak macro economic data.
On Thursday, gold reached a two-month high, very near to its all-time high of $1,256 seen on June 18. According to Barclays’ commodities report, “Investment demand has led to buying in this white metal since the last few days. Total metal held across the six physically backed silver ETPs retained their newly established peak at 13,005 tonnes. Inflows for the year to date have reached a paltry 640 tonnes. However, this is far too low from the same period last year, which had hit 3,073 tonnes by August 25, 2009.”
Bloomberg adds: Silver has outperformed the yellow metal since August 23, gaining six per cent compared with gold’s 1.4 per cent gain, as investors bought the white metal because of its relative cheapness. Silver is unique in that it is a precious metal and an industrial metal, Wallace Ng, executive director of commodities at ABN Amro Bank in Hong Kong, said on Thursday. Gold is traditionally viewed as a safe haven but silver is never far behind as a second choice.
Silver for immediate delivery rose as much as 1.1 per cent to $19.11 an ounce, the highest price since June 28, and last traded at $19.0525 at 3:33 p.m. in Singapore. Gold was little changed on Thursday after climbing as high as $1,241.50 an ounce yesterday, the highest price in eight weeks.
Holdings in the iShares Silver Trust, the biggest exchange-traded fund backed by silver, increased on August 24 for the first time in six weeks. The metal doubles as a store of value for investors concerned about the economy and as a raw material. Industrial applications including electrical conductors and batteries account for about half of demand.
‘Looking Cheap’
“Silver is looking cheap and we’re seeing strong investment demand for small ingots, as well as good industrial demand from solar panel makers,” said Dick Poon, Hong Kong-based manager of precious metals trading at Heraeus Ltd, on Thursday. The solar industry will consume up to 1,500 tonnes (48 million ounces) this year, Poon estimates.
“Even if investors are expecting another downturn, there will always be demand for alternative sources of energy,” said Poon.”We could see prices back up above $20 very soon.” Silver last traded at more than $20 in March 2008.
Silver lagged gold this month through August 23, losing 0.1 per cent compared with the yellow metal’s 3.8 per cent gain in the period, as investors turned to bullion to preserve wealth on concerns that the global economic recovery was weakening.
“We’re bullish on both silver and gold,” said ABN’s Ng. “Even though we see more festival demand from India in the past few years because of higher gold prices, silver can never replace gold in that market. They may buy less, but they will still buy gold and that should keep prices supported.”
The wedding season in India, the world’s largest gold consumer, runs from November to December and from late March through early May.
