Momentum to Propel Silver


"Silver benefits from general optimism, interest in safe-haven assets."

Despite the fact that there is a large open short position which is held by the four or less large commercials trading via Comex, silver is benefiting from both general optimism on industrial production in emerging markets, and the investor interest in safe-haven assets like gold. Barclays Capital recently reported that the holdings of global silver exchange traded products it tracks has topped 14,000 metric tons for the first time. "Indeed, inflows in October have already hit 311 (metric tons), surpassing total inflows for the whole of August and almost half of September's 702 (metric tons)," Barclays says.

Unlike gold, platinum and palladium, silver still remains well below its all-time high in spite of a developing shortage of supply. One of the reasons for this is been the alleged price manipulation by large traders such as the bullion banks that have sold massive amounts of silver on the futures markets to keep prices down. Currently, the open short position held by these banks is equivalent to approximately the annual global mining supply of silver.

Now U.S. regulators have been urged to reveal the results of a two-year-long investigation into silver and gold price manipulation allegations. No matter the results of the investigation, the prices of silver still remain much undervalued and should be added to one's investment portfolio, especially as this time around there are many instruments available to investors unlike 1980. But I would recommend that investors accumulate the physical metal in the form of silver bullion before investing in the other silver or silver related investment instruments.

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