Silver Prices Make Modest Gains, Uncertainty Remains
While silver prices made moderate gains on the day, uncertainty about the global economy continues to erode investors risk appetite. Some analysts have even called into question silver's role as 'poor man's gold' as a hedge against inflation.
By Michael Montgomery—Exclusive to Silver Investing NewsSilver prices have been experiencing high volatility over the past two weeks. On the day, spot silver made a modest gain up to $31.93 per ounce, a gain of 4.65 percent. Trading down from a range of $40 per ounce in mid-September, prices were as low as $26.69 per ounce yesterday. The price moved well below the support levels that most analysts had predicted. Many factors behind the recent volatility are to be considered. Namely, ongoing a stronger US dollar helped by Eurozone debt concerns, as well as a silver margins being raised yet again by the CME group. Investors have been pulling money off of the table in almost all markets, as it seems their risk appetite has simply evaporated. Eurozone concerns and the US Dollar The ongoing concerns about the state of the European economy have help support the US dollar over the past few weeks. However, the dollar was weighed down against the euro after the ECB stated that interest rates would remain low, and the Bank of England said it planned to resume bond purchases. This may explain, in part, the modest rally of silver and gold prices on the day, as the weaker dollar is usually a supportive factor for the two metals. “Over the long run, the crisis in Europe is clearly very bullish for gold and silver because the only way out of the current situation is additional stimulus from central banks. Additional stimulus will put further downward pressure on all the major currencies,” stated Scott Gardner, chief investment officer at Verdmont Capital. Going forward the announcements are a positive for precious metals. The low interest rates and bond purchases will increase Europe's money supply, heightening the risk of inflation.