Gold Bullish, Silver Volatile


"ScotiaMocatta says silver outperformed gold last month, but volatility in silver is likely to remain high."

In a recently published analysis, ScotiaMocatta said the medium outlook for gold remains bullish "as no quick fix to the global problems is likely."

"However, we feel gold will remain highly sought after regardless of whether we see deflation or inflation, as people seem to be turning to gold as a hedge against money and economic disorder," ScotiaMocatta noted in its March 2009 issue of Metal Matters.

Silver enjoyed a strong run last month, which saw the metal's price rise 16% compared to gold's 11% rise. ScotiaMocatta found that since the lows in October 2008, silver has climbed 71% compared to gold's 48%.

"The fact silver has outperformed gold to such an extent is particularly interesting considering silver is an industrial metal as well as a precious metal. However, this highlights the fact that silver is seen as a cheaper way into the precious metals market and because it is a smaller market, moves tend to be exaggerated."

While silver prices are now correcting and the pull back may have further to run, ScotiaMocatta advised "the overall financial climate is bullish for safe haven investments and silver is well placed to benefit from that. That said, given so much depends on investment interest remaining strong, volatility in silver is likely to remain high."

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