UPDATED: Silver Prices Soaring TO $49.79
Bloomberg Business Week: Silver rallied to an all-time high as investors sought to protect their wealth against accelerating inflation and a weaker dollar with holdings in a metal that also benefits from economic growth. Spot gold also reached a record.
Immediate-delivery silver climbed as much as 5.4 per cent to US$49.79 per ounce, beating the previous peak, which according to research company GFMS Ltd was US$49.45 in 1980.
April 27 (Bloomberg) — The dollar fell to a 16-month low versus the euro on speculation the Federal Reserve will consider further easing measures to support the U.S. economy after its bond-buying program expires in June.
The euro advanced for a fourth day against the yen before a report that economists say will show the region’s industrial orders increased, adding to evidence that the European Central Bank may raise interest rates. The Australian dollar climbed to a record before a government report forecast to show inflation quickened in the first quarter.
“The Fed is clearly doing nothing for a while, whereas the ECB and others are going to keep raising rates,” said Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia, the nation’s largest lender. “I still see the dollar being weak and the euro will keep pushing higher.”
WSJ Reports today:
This year investors are expected to pile a record $4.5 billion into the silver market, accounting for 24% of the world’s total demand, says GFMS Ltd., a metals consulting firm in London. That’s the highest level, in dollar terms, in decades. Silver’s relatively small market size—$19 billion compared with $170 billion for gold—has also played a role in amplifying the impact of investors, according to GFMS.
The strength in silver prices has prompted a flurry of development around the globe and pushed anticipated production in 2010 to 733.2 million ounces, up 3.3% from 2009 levels, and up 14% since 2006.
Silver has some inherent appeal due to its industrial use in electronics, silverware and coins. And reserves are limited. According to the U.S. Geological Survey, there are fewer years of U.S. silver production left in the ground than any other precious metal including gold.
The recent price increase has been fueled by other factors in addition to investor interest. For instance, China recently abolished an exports tax rebate on metals. That has resulted in a 59% decline in silver exports.
China is a major silver producer and was a big exporter until 14 months ago. Strong demand there, coupled with the elimination of the tax break to protect domestic natural resources, have led Chinese producers to slash exports.