Futures Market News
Commodities investors see silver lining
Oct 20, 2010 03:15 PM
Speculation about the fragility of the global economic recovery has driven up the price of gold in commodities markets around the world - but a better-performing metal with more economic applications has generally missed out on the headlines.
Silver, which has held a significant role in coinage as long or longer than its more expensive counterpart, is up more than 40 percent this year; gold, by contrast, has gained about 23 percent.
It's also more versatile than gold, which gains and loses value as a pure play hedging against inflation and economic meltdown.
"There are two drivers for silver: industrial demand and gold. The two drivers are both positive at the moment," Matthew Turner, an analyst at Mitsubishi, told the Financial Times.
Silver is bought as an investment and a hedge, in the same manner as gold. However, it's also employed in high-technology industries like solar panel manufacturing.
It also tends to be a lot more volatile than gold - in the 1980s, the price infamously spiked and then crashed after the Hunt Brothers tried to corner the silver market using silver derivatives.
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