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Silver Surges 4.5% To Over $37/Oz On "Massive Fund Buying"
Silver Surges 4.5% To Over $37/Oz On "Massive Fund Buying"
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Submitted by Tyler Durden on 02/29/2012 07:55 -0500
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Silver Surges 4.5% To Over $37/Oz On "Massive Fund Buying"
Gold’s London AM fix this morning was USD 1,788.00, EUR 1,329.96, and GBP 1,120.79 per ounce..
Yesterday's AM fix was USD 1,774.75, EUR 1,321.48, and GBP 1,120.42 per ounce.
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Cross Currency Table – (Bloomberg)
Gold rose 1% in New York yesterday and closed at $1,783.90/oz. Gold rose in Asia to a high of $1,790.16 it’s highest since mid November then edged down. Europe this morning saw sideways trading until unusually volatile trading around the London AM fix saw gold rise from $1785.oz to over $1790/oz at 1030 GMT and then fall quickly to $1783/oz.
Spot silver has gained another 0.5% to $37.05 an ounce, after surging 4.5% yesterday once it rose above resistance at $35.50/oz. Silver reached a 5 month high of $37.21 but remains more than 30% below its nominal high in of April last year of $48.44.
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Silver Spot $/oz – (Bloomberg)
Over 800 European banks have taken €529.5 billion from the ECB today after taking €489 billion euros at the first tender in December. The ECB’s 3 year lending is now near 1 trillion euros ($1.35 trillion) and the ECB’s balance sheet looks increasingly precarious.
Although the flood of paper has been credited with fuelling a rally on Europe’s distraught bond markets and safeguarding the region’s banks, it is another exercise in kicking the beer keg down the road as it fails to address the fundamental issue which is the insolvency of many European banks and many European nations and the obvious risk of contagion from that.
The continuation of ultra loose monetary policies increases the risk of inflation which will benefit gold which is an excellent inflation hedge. Extremely low yields on deposits and “risk free” sovereign debt means the opportunity cost of carrying non yielding bullion remains very low.
Spot silver gained 0.4% to $37.05 an ounce, after surging 4% and hitting a 5 month high of $37.21 in the previous session.
Silver as ever outperformed gold yesterday and traders attributed the surge to “massive fund buying” and to “panic” short covering. Some of the bullion banks with large concentrated short positions covered short positions after the technical level of $35.50/oz was breached easily.
Massive liquidity injections and ultra loose monetary policies make silver increasingly attractive for hedge funds, institutions and investors.
This time last year (February 28th 2011) silver was at $36.67/oz. Two months later on April 28th it had risen to $48.44/oz for a gain of 32% in 2 months.
There then came a very sharp correction and a period of consolidation in recent months. Silver’s fundamentals remain as bullish as ever and the technicals look increasingly bullish with strong gains seen in January and February.
Very bullish is the fact that silver also remains more than 30% below its record nominal high 32 years ago in 1980 and more than 75% below its inflation adjusted high of $140/oz in 1980.
The gold-silver ratio dropped to its lowest level in 5 months, after silver rose more than 12% so far this month and an enormous 34% this year, outperforming other precious metals.
Rising holdings of silver-backed ETF’s also indicated growing investor interest in the metal. The overall silver Exchange Traded Funds holdings rose to 491.079 million ounces, the highest since last May.
Spot platinum gained nearly 0.5% to $1,722.24, as investors await the latest in Impala Platinum's dealing with an illegal strike that has disrupted production at Rustenburg, the world's largest platinum mine.
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Originally Posted by steyr_m
