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PR Newswire
10-04-2011, 08:27 AM
This article warns against silver.....
Apr 10, 2011
Beware of the silver streak
Price surge of 160% in six months shows speculative excess and inflation rise could prick bubbles
London - That silver and gold prices are racing to new record highs is a bad sign.
There is physical demand for the metals but, as Barclays Capital said neatly of silver, 'prices have discarded their fundamentals'.
The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.
Investors have rushed to buy silver as a safe haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in.
The precious metal bubble has been partly pumped by geopolitical fears; the ongoing euro zone debt crisis has also had a part to play.
But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing.
The silver-gilt investment thinking seems plain.
If dollars are being printed like so much green wallpaper, money you can bite - such as silver and gold - seems so much better.
Fed policy is blowing precious metal bubbles. The latest surge in prices coincides with Fed minutes showing that some officials thought 'exceptional policy accommodation could be appropriate beyond 2011'.
The Fed sees its printing of money as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.
If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief.
It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth.
But its history is a warning. It also behaves as a sort of 'geared' gold play outperforming the yellow metal in times of excitement but it deflates faster when the bears get the upper hand.
The five-year average price of silver is US$16. It does not need to go all the way back there, from its current US$40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.
Reuters
Apr 10, 2011
Beware of the silver streak
Price surge of 160% in six months shows speculative excess and inflation rise could prick bubbles
London - That silver and gold prices are racing to new record highs is a bad sign.
There is physical demand for the metals but, as Barclays Capital said neatly of silver, 'prices have discarded their fundamentals'.
The price of silver, in the region of US$15 an ounce last September, is now over US$39 an ounce. Its staggering 160 per cent advance in little more than six months is a sure indication of speculative excess.
Investors have rushed to buy silver as a safe haven investment in the mould of gold because it was seen, until recently at least, as a cheaper way in.
The precious metal bubble has been partly pumped by geopolitical fears; the ongoing euro zone debt crisis has also had a part to play.
But one thing above all is supercharging the price of silver: the US Federal Reserve's decision early last November to print US$600 billion (S$760 billion) in a second round of quantitative easing.
The silver-gilt investment thinking seems plain.
If dollars are being printed like so much green wallpaper, money you can bite - such as silver and gold - seems so much better.
Fed policy is blowing precious metal bubbles. The latest surge in prices coincides with Fed minutes showing that some officials thought 'exceptional policy accommodation could be appropriate beyond 2011'.
The Fed sees its printing of money as insurance against renewed economic weakness but its policy could easily rebound badly on a recovering US economy in which there is now a palpable inflation risk.
If inflation rises, US monetary policy could change abruptly. That would prick bubbles around the world. Gold and silver could fall precipitously. Higher interest rates would cast the income deficiencies of precious metals into sharp relief.
It is true that silver has industrial uses - especially in electronics - and its price may receive some support from world economic growth.
But its history is a warning. It also behaves as a sort of 'geared' gold play outperforming the yellow metal in times of excitement but it deflates faster when the bears get the upper hand.
The five-year average price of silver is US$16. It does not need to go all the way back there, from its current US$40, for investors to lose a fat pile. Those who have fled printed paper may find their precious assets are anything but solid.
Reuters
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