(WSJ)Silver has enjoyed greater price gains than gold so far in 2009, and that was the case again Monday as it benefited from hopes an economic recovery will jump-start industrial demand.
Nearby August silver gained 3.1 cents to $14.191 an ounce on the Comex division of the New York Mercantile Exchange, while most-active December gained 3.2 cents to $14.231. By contrast, most-active December gold lost $10.90 to $942.30 an ounce.
Silver often follows gold, although sometimes with greater moves since it is a less-active market and thus more prone to volatile price swings. But so far in 2009, December silver has risen 26%, while December gold is up 6%. "Silver sort of has a dual personality," said Bart Melek, global commodity strategist with BMO Capital Markets.
It has a role as a precious metal and is sometimes referred to as "poor man's gold," often bought with gold as a hedge or safe haven against factors such as dollar weakness, inflation fears and geopolitical disturbances, and conversely selling off with gold when these supportive influences abate.
But silver has a more significant role as an industrial metal because of such uses as in electronics and batteries. Thus, silver also sometimes tracks base metals like copper, which rose Monday, Mr. Melek said. Copper prices have more than doubled since their December lows mainly because of strong Chinese demand but also amid expectations of economic recovery elsewhere.
[Silver Futures]
"It's the risk-appetite theme, based on the expectation that the economy is going to recover," said Tom Pawlicki, analyst with MF Global. "Silver, having more industrial applications, is benefitting from that."
Also, Mr. Melek pointed out, any production cutbacks in base-metals output following last year's declines in commodities prices mean less supply of silver. Most silver is mined as a by-product of other metals, such as lead, zinc and copper.
By Allan Sykora
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