Silver’s dramatic rise comes to abrupt halt
By Gregory Meyer in New York
Published: April 26 2011 18:29
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Silver’s dramatic rise came to an abrupt halt as traders returned to their desks in the bullion hub of London and awaited an announcement from the US Federal Reserve.
Spot silver fell as much as 4.9 per cent to $44.63 per troy ounce, outpacing gold’s 1 per cent loss to $1,494 per ounce. Silver was the worst performer in the benchmark Reuters-Jefferies CRB commodity index.
The Fed may shed more light on the future of US monetary policy today, after its rate-setting committee wraps up a two-day meeting and Ben Bernanke, chairman, gives his a post-meeting press conference.
Silver has gained more than 145 per cent in the past year, and 19 per cent in April alone, amid an investor clamour for coins and exchange-traded funds. Individuals have been especially attracted to silver because it trades at a fraction of the gold price.
“In a world where there is a great deal of uncertainty about sovereign debt, uncertainty about the direction of currency markets and concern about whether central banks have really got a grip on inflation, silver is reflecting those concerns,” said Tom Kendall, precious metals analyst at Credit Suisse in London. Silver tends to be more volatile than gold, suggesting it could fall faster if investors flock to another haven.
“Silver has outperformed gold phenomenally over the last nine months now and it is more vulnerable to a washout on the downside,” Mr Kendall said.
In response to silver’s volatility, New York’s Comex exchange raised the amount of collateral required to hold silver futures. This forced some traders to pare positions, said George Gero, vice-president at RBC Capital Markets in New York. “This was sort of a wake-up call to take some profits,” he said.
Comex silver futures changed hands in record volumes on Monday, when trading in the London-centred spot market was light.
Silver has yet to breach the $50 record high reached in January 1980, when the billionaire Hunt brothers attempted to corner the market. The price would be about $140 today.
Silver’s dramatic rise came to an abrupt halt as traders returned to their desks in the bullion hub of London and awaited an announcement from the US Federal Reserve.
Spot silver fell as much as 4.9 per cent to $44.63 per troy ounce, outpacing gold’s 1 per cent loss to $1,494 per ounce. Silver was the worst performer in the benchmark Reuters-Jefferies CRB commodity index.
Silver on Monday had reached $49.31, the highest level since 1980, as investors sought out alternatives to cash at a time of low interest rates and heightened sovereign debt fears in Europe and the US.
The Fed may shed more light on the future of US monetary policy today, after its rate-setting committee wraps up a two-day meeting and Ben Bernanke, chairman, gives his a post-meeting press conference.
Silver has gained more than 145 per cent in the past year, and 19 per cent in April alone, amid an investor clamour for coins and exchange-traded funds. Individuals have been especially attracted to silver because it trades at a fraction of the gold price.
“In a world where there is a great deal of uncertainty about sovereign debt, uncertainty about the direction of currency markets and concern about whether central banks have really got a grip on inflation, silver is reflecting those concerns,” said Tom Kendall, precious metals analyst at Credit Suisse in London. Silver tends to be more volatile than gold, suggesting it could fall faster if investors flock to another haven.
“Silver has outperformed gold phenomenally over the last nine months now and it is more vulnerable to a washout on the downside,” Mr Kendall said.
In response to silver’s volatility, New York’s Comex exchange raised the amount of collateral required to hold silver futures. This forced some traders to pare positions, said George Gero, vice-president at RBC Capital Markets in New York. “This was sort of a wake-up call to take some profits,” he said.
Comex silver futures changed hands in record volumes on Monday, when trading in the London-centred spot market was light.
Silver has yet to breach the $50 record high reached in January 1980, when the billionaire Hunt brothers attempted to corner the market. The price would be about $140 today.
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Copyright The Financial Times Limited 2011
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