Physical silver shortage rumors may drive panic buying
Dubai Chronicle By Editor
Recent talks between silver traders suggest renewed interest towards silver, and in particular towards silver demand compared to silver production and availability. Such discussions are nothing new to people who follow the extremely volatile commodity on daily basis since long time. As a matter of fact, we are expecting the white metal’s price to rise by 10% to 25% since some time now.
At present, however, silver trades remain range bound. The price is slightly moving up and down around the mid level of its 52 week range, currently at around $31.26 per ounce. The 52 week low was $26.40, while the 52 week high was $37.43 per ounce.
So far, at 8.30am Dubai time, it doesn’t really seem anyone with a capability to buy large quantities of physical silver is actually panicking.
However, later in the day it is likely the price to advance triggered by newly released optimistic economic data. China’s economy is forecast to grow at around 8.4% this year, the Shanghai Securities News reported earlier on Monday, citing a report from a government think tank. This is a positive perspective as the country’s economy grew 7.8% in 2012, while the inflation rate was at 2.6% for the full year. However, this is a rather long term outlook.
Overall trade in China is expected to grow 8.5% this year, while exports are expected to grow 8.3%. Improving economic environment and rising demand for merchandise actually supports silver usage as industrial material. In addition, better earning opportunities predict higher consumer spending.
Most Asian markets advanced Monday amid a positive earnings outlook for Chinese firms. Japanese stocks fell from near three-year highs as investors took profit.
The US dollar regained some lost ground Monday along other major currencies as the Euro and the British pound. Japanese yen fell further amid a pushback from Tokyo over forex-related criticism. Later in the week, key events for the US currency such as fourth-quarter economic growth data, a Federal Reserve policy decision and Friday’s monthly jobs report may further support the greenback strength.
In general, the interest in precious metals as store of value is weakening in favor of riskier assets that generate faster profits such as equities.
However, silver is different than gold as its use as industrial metal is predicted to grow with the revival of the global economy. Gold depends largely on central banks buying and when currencies strengthen, the yellow metal’s value will not be really sought after.
