Silver climbed to the highest price
since 1980 in New York and London as investors sought a
protection of wealth in the metal that may also benefit from
economic growth. Gold advanced to a record, with futures rising
above $1,300 an ounce.
Silver has advanced 27 percent this year, outperforming
gold, global equities, Treasuries and most industrial metals.
Batteries and other industrial uses account for about half of
silver demand, according to researcher GFMS Ltd. Gold, which
usually moves inversely to the dollar, reached an all-time high
for the fourth day this week as the dollar slid on concern the
Federal Reserve is moving closer to boosting debt purchases.
“The gold traders and investors are looking at silver,”
said Jesper Dannesboe, a senior commodity strategist at Societe
Generale SA in London. “They think it’s cheap, and now they’re
piling into the silver market. Silver is really about hot money.
It may have several more dollars to go.”
Silver futures for December delivery climbed as much as 1.1
percent to $21.445 an ounce, the highest price since October
1980, and traded at $21.40 at 8:06 a.m. on the Comex in New
York. Silver for immediate delivery in London added as much as
1.4 percent to $21.415 an ounce and was last at $21.3625.
Gold for December delivery rose as much as $5, or 0.4
percent, to $1,301.30 an ounce, and was last at $1,300 on the
Comex in New York. Immediate-delivery bullion added $6.20, or
0.5 percent, to $1,298.65 after earlier today reaching
$1,299.90.
Dollar’s Slide
Silver, used to create the first telegraph messages, is
heading for a seventh quarterly advance in London. That’s the
best streak since 1974. Prices reached an all-time high of
$50.35 an ounce in New York in 1980, a year after the Hunt
brothers tried to corner the market.
Precious metals have gained this year as central banks and
governments maintained low borrowing costs and spent trillions
of dollars to stimulate their economies. The dollar slipped to a
five-month low against the euro on Sept. 22 after the Fed left
its benchmark interest-rate target at a record low and pledged
to take more steps to spur growth if necessary. The greenback
fell as much as 0.9 percent today.
“Gold is showing there is no confidence in the dollar,”
said Bernard Sin, head of currency and metal trading at bullion
refiner MKS Finance SA in Geneva. Recent “data has been showing
signs of a troubled economy. That’s why we’ve seen this huge
buying for investors as a safe haven.”
Gold and Inflation
Gold, up 18 percent this year, is heading for its 10th
consecutive annual gain in London, the longest winning streak
since at least 1920. Gold assets in exchange-traded products
lost 1.41 metric tons to 2,088.32 tons yesterday, after reaching
a record 2,089.74 tons on Sept. 22, according to Bloomberg data
from 10 providers. Gold is also benefiting from central bank
buying, World Gold Council Managing Director Marcus Grubb told
Maryam Nemazee on Bloomberg Television’s “On the Move.”
Prices have gained this year even as U.S. inflation slowed.
Bullion is traditionally bought as a hedge against rising
consumer prices. Inflation expectations, based on the 10-year
U.S. Treasury breakeven rate, have fallen to 1.83 percent from
2.25 percent six months ago.
Investors have grappled with conflicting reports about the
strength of the economy. While a report yesterday showed U.S.
home sales were slightly stronger than economists had forecast,
the number of Americans seeking unemployment benefits
unexpectedly rose in the latest week and Europe’s services and
manufacturing industries slowed this month more than economists
forecast.
‘Other Drivers’
The euro gained against the dollar today as the Munich-
based Ifo institute said German business confidence unexpectedly
rose in September. European equities were lower today.
“There are other drivers such as industrial uses, for
those who believe in the economic recovery,” Dannesboe said,
referring to silver’s advance this year.
Global holdings of silver in exchange-traded products were
13,497.72 tons as of yesterday, the most in at least seven
months, data compiled by Bloomberg from four providers show.
Assets in the iShares Silver Trust, the biggest ETP backed by
silver, jumped 73.04 tons to a record yesterday, the company’s
website showed.
An ounce of gold bought as little as 60.669 ounces of
silver today in London, the least since October last year,
according to Bloomberg data. The ratio fell as low as about
43.57 in 2006 and has averaged about 61.79 this century.
Silver ‘Outperforms’ Gold
“Risk aversion on a slew of poor U.S. and European Union
economic data, the climb higher in the gold price plus strong
industrial demand have seen the silver price clearly outperform
gold since late March,” analysts at VM Group said in a report
last week. Gold has added 17 percent in London since the end of
March, compared with silver’s 22 percent gain.
Platinum for January delivery in New York added as much as
0.2 percent to $1,652.70 an ounce, the highest price since May
19, and was last down 0.2 percent at $1,647.50. Palladium for
December was little changed at $556.80 an ounce. The metals are
used in pollution-control equipment for vehicles as well as
jewelry.
To contact the reporter on this story:
Nicholas Larkin in London at
nlarkin1@bloomberg.net.
To contact the editor responsible for this story:
Claudia Carpenter at
ccarpenter2@bloomberg.net.
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