How Precious Is Silver?

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...Before yesterday the desire was to raise cash, and gold isnít cash, so it was sold. Overnight, the fear of a systemic failure became greater than the need to raise cash, and gold is insurance against disaster, so it was bought. Apparently so is silver...

There is an ongoing debate among investors whether silver is a precious metal or an industrial metal. Yesterdayís unique market action gives us an opportunity to answer this question.

Yesterday the price of gold rose from $777.70 to $862.90 an ounce for a total rise of $85.20 or nearly 11%, which may be the largest single day rise in the dollar price of gold since gold started trading in US dollars. Or if you want to look at it the other way, it represents the US dollarís largest single day devaluation, in terms of gold, since President Nixon closed the gold window in 1971...

If silver is indeed an industrial metal, you would expect it to have fallen along with copper, nickel and all the rest. So, what did silver do yesterday? It rose from $10.45 to $12.06 an ounce for a gain of $1.61 or over 15%. The major silver miners like PAAS and SSRI jumped along with silver and SLV, the silver bullion ETF...

Before yesterday the desire was to raise cash, and gold isnít cash, so it was sold. Overnight, the fear of a systemic failure became greater than the need to raise cash, and gold is insurance against disaster, so it was bought. Apparently so is silver.

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