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Wednesday, May 16, 2012

Three Reasons Silver Prices Will Rally - Money Morning

Three Reasons Silver Prices Will Rally - Money Morning

With the recent volatility and lows in the gold market, many investors also have been wary of silver prices

Silver on Friday closed down 0.4% to $28.87 per ounce. For the week, prices dropped 5.1%. 

Not the prettiest picture, but for the year silver has increased more than twice the price of gold thanks to growing confidence that the global economy will dodge another recession bullet. 

David Jollie, an analyst at Mitsui & Co. Precious Metals Inc., recently said to Bloomberg News, "A greater amount of confidence in the global economy generally means higher growth and that means more silver demand. If you look out beyond the end of the year, you can still see reasons to be bullish."

Why Silver Prices Will Rally

Increased Demand: The global head of metals analytics at Thomas Reuters GFMS, Philip Klapwijk, has forecast silver sales to increase as end-users expand inventories that thinned at the end of 2011. 

A large portion of silver demand - 80% - comes from fabrication, which is expected to rise about 3% to 5% this year to roughly 900 million ounces.

Also helping is China's manufacturing expansion and an increased electronics industry demand. 

Klapwijk also sees current monetary policy increasing investors' appetite for silver and triggering a subsequent price rise. 

Gold, Silver Prices Dip while US Bullion Coins Notch Gains | Coin News

Gold, Silver Prices Dip while US Bullion Coins Notch Gains | Coin News

Gold and silver prices continued to drift lower Tuesday, but platinum closed higher for the first time in more than a week and palladium settled up for the first time since Thursday.
Gold was again pressured by a weaker euro and stronger U.S. dollar as the yellow metal fell to the lowest point in more than 4-1/2 months.
"(Gold’s) safe haven status has been tarnished," Richcomm Global Services senior analyst Pradeep Unni said, according to Reuters. "It will wobble on the euro’s weakness, but in a very short term, bargain hunting and pent-up demand will emerge taking it higher."
Gold prices for June delivery fell $3.90, or 0.2%, to $1,557.10 an ounce on the Comex in New York, marking a settlement that is the lowest since December 29. Prices ranged from an intraday low of $1,546.80 to a high of $1,564.40.
"The commodity sector is being hit with massive liquidation of funds as investors’ fears regarding a slowing global economy and potential European sovereign issues trump all else," MarketWatch quoted Tom Essaye, editor of the 7:00′s Report, a daily commentary on equity and commodity markets and the economy.
"Gold is getting to that critical level of support at $1,550, and if you can stand the risk, taking a shot there on the long side probably makes sense… As Europe continues to unravel, the prospect of a full blown crisis will increase, and I think you’ll see gold start to absorb some of that money looking for a safe haven beyond the U.S. dollar."

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