Silver climbed to the most expensive relative to gold in 11 months as investors wanted their governments to protect the wealth of speculation can add to the monetary easing to help recovery, weakening currencies.
The ratio of gold to silver dropped below 60 years for the first time since October, falling as low as 59.8955. Silver has outperformed the yellow metal since June 30, the promotion of 17 percent versus 5.5 percent rise in gold prices as investors bought commodities because of its comparative low price.
“Silver is trying to catch up with gold,” said Ellison Chu, manager precious metals at Standard Bank Asia Ltd. “already on a record gold, but silver is pretty far from it.”
The Federal Reserve said Sept. 21 it was prepared to further monetary policy to stimulate growth and ease the “return inflation over time to levels that correspond to its mandate.” The Bank of Japan will further relaxation steps on the two-day meeting to discuss starting October 4, Kyodo News reported, quoting unidentified sources close to the matter.
Silver for immediate delivery gained as much 0.8 percent to $ 21.90 an ounce, its highest price since September 1980, and last traded at $ 21.8340 at 2:04 p.m. in Singapore. The metal reached an all-time high of $ 49.45 in January 1980, according to Bloomberg data. Gold jumped to a record $ 1,312.25 an ounce today.
Weakness of the dollar
Companies in the iShares Silver Trust, the largest exchange traded fund backed by the metal, rose 143 tonnes to a record 9,756.04 tons as of yesterday, according to the website of the company. The metal doubles as a store of value for investors worried about an economic slowdown and feedstock. Industrial applications for silver, including wires and batteries represent about half the global demand.
Investors are putting money precious metals and other tools like the dollar “is not as reliable,” Chu said Standard Bank. The Dollar Index, a six-coin measure of the value of the dollar, led by its worst quarterly performance since the period ended June 2002.
“People are expecting the U.S. dollar to remain weak and stabbing money in commodities is a good alternative,” said Chu from Hong Kong. The Dollar Index fell to 78.828 today, the lowest level since February.
China exports
Declining exports from China has contributed to the recent rally silver, according Heraeus Ltd. China exported 64 percent less of the precious metal in the first eight months of this year compared to same period last year, according to customs data.
“Fabrication demand from jewelers and industrial demand for solar panel makers has been very good this year in China,” Heraeus precious metals’ trading manager Dick Poon said. China is the world’s third largest consumer and producer of silver, according to The Silver Institute.
source:bloomberg
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