Futures Market News
Silver re-captures allure - volatility be darned!
Jun 27, 2011 01:02 PM
Silver futures, the shiny precious metal that is known for its volatility as the price spikes up and down often without notice or warning, are believed to be on the upswing and increasingly in demand, various published reports indicate.
Mints and exchanges last week saw high activity in the silver market while money managers are re-focusing on silver and gold futures for investment purposes. Bloomberg reports this is partially due to concerns about the sovereign debt contagion spreading beyond European borders.
The news source also cites central banks' willingness to print paper money as strategies to spur moribund economies, which run the risk of decreasing the value of those currencies.
"Silver's still booming and it's been going strongly for a year," Ron Currie, sales and marketing director of the Australian Mint in Perth, told Bloomberg last week. "A lot of the buying is by people new to the market."
He said the most prominently represented demographics of purchasers of Australian silver are investors from Europe and the U.S.
Presently valued at about $33 per troy ounce, silver futures were aggressively bullish in April. The precious metal rose to within $1 of two significant benchmarks last seen in January 1980: the $50 per ounce psychological barrier and the all-time record price of $50.35 per troy ounce.
But less than two weeks later, in early May, silver futures led the commodity crash and were valued at $31 per troy ounce.
Nonetheless, silver futures had a strong performance during their debut on the Thailand Futures Exchange last week. The Bangkok Post reported 555 silver contracts sold on Monday, June 20, 178 of which was during the morning session.
The most demanded contract was the one for August, which saw 481 sales. Compare those figures with gold's first appearance on the same exchange, which was in 2009. One-hundred sixty-one contracts sold during the morning session.
Despite Securities and Exchange Commission restrictions on that exchange, such as sales agents mandated to have three years experience before selling, silver futures are projected to be a vital cog, according to an administrator of that body.
Thirachai Phuvanatnaranubala, SEC secretary general, said managing price risks for a key raw material will underscore the value that silver futures have as a vital device.
Large-size managed funds and hedge funds upgraded their wagers on silver futures and options germane to the precious metal for week ended June 21, according to Barrons.
The weakening dollar also is benefiting silver futures, Barrons reports.
The Australian Mint reports selling 10.7 million silver coins weighing 1 ounce since early July 2010, Currie told Bloomberg. That figure is 66 percent greater than figures from the year prior as well as 10-times as high as figures from five years ago.
On April 25, silver futures checked in at $49.79 per troy ounce during what essentially was a two- or three-week drive. But the precious metal could push no further and it - as well as other commodities - crashed.
As owner of the globe's largest economy, the U.S. also has seen demand climb for silver. The American Eagle silver coin skyrocketed 30 percent in May, when 3.65 million sold. Thus far this year, 18.9 million ounces of silver have been sold.
The Perth Mint manufactures approximately 6 percent of the globe's silver. The facility also kicked off services performed by a new silver-coin press this past April and it has been humming ever since as part of the effort to keep up with demand for the precious metal.
"The gold price is high but it’s not moving a great deal, so it’s not bringing new people into the market," Currie said. "The institutional buyers and the big banks have slowed, but the mums and dads are still buying."
At 1:46 p.m. on Monday, silver futures slumped 3.13 percent, a $1.085 slip to $33.565 per troy ounce.
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