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Monday, 23-May-2011 15:59 Email | Share | Bookmark
Silver Investing Is Silver Decoupling From Gold?

I have been subsequent gold and silver very closely for a couple of decades. In the previous number of months I have discovered that on days when the price of precious metals transfer considerably, the price tag of silver usually moves two, two-and-a-half, or 3 occasions as much, on a proportion basis, as the cost of gold. I began to believe of silver having a beta of two to gold. This beta issue has been good for silver investing because there have been a lot more up days than down days.I reasoned that the difference in the fundamentals amongst gold and silver was responsible for the greater price tag move in silver on the upside, and that marketplace manipulation was responsible on the downside. The primary big difference in the fundamentals is that more than fifty percent of the annual manufacturing of silver is consumed by industrial apps. As you may by now know, gold has really minor industrial application. Those of us involved in silver investing for the lengthy-phrase count on supply/need to win out in the stop. At the beginning of 2011 I wrote that the ratio of the value of gold to the price tag of silver was about 68:1 on January one, 2010, and had fallen to 46:1 on January 1, 2011. At the very low of both the price tag of gold and the cost of silver in late January 2011, the ratio rose to 48:1. Nowadays, just a few hrs soon after the open, the ratio is 42:1.Final week I study two technical analysis of the price of gold. The two conclude that a significant pullback is extremely most likely. If the beta I spoke of earlier holds, that would be really undesirable for silver investing. I considered placing stops on my paper silver investments, but determined in opposition to it. The cost of silver is so volatile I could easily get stopped out and not be in the market place if there is a quick reversal. I am glad I left my funds exactly where my mouth has been the past a number of months. In the very last three trading days, the price of silver has risen about ten% while the cost of gold has risen less than two%. In no way in the modern months that I have followed gold and silver daily has silver outperformed gold by these a margin. What is happening? I will not believe that everyone understands for sure, but I believe it may be the very first rumblings of silver fundamentals exerting themselves.Everyone who has a fundamental comprehending of the futures markets understands that the volume of silver represented by open contracts exceeds the volume of physical silver in the globe by hundreds, and generally thousands of percent. Most agreement holders possibly buy or sell, dependent on whether they are extended or short, to close their position. The contracts that are held to expiration be settled inside of thirty days. I consider the physical shortage of silver might be becoming felt. Those who have it, like me, aren't prepared to market. As frantic potential traders scramble to cover their positions ahead of the February expiration date, value is shooting up. But I'm nevertheless not promotingOf course, if I did market my physical silver, it wouldn't be enough to settle even 25% of a single of the tens of hundreds of open contracts. So I'm little a lot more than an observer. But silver investing is beginning to get quite interesting. When the cost of silver does decouple from that of gold, and it might be happening now, I assume it to stay decoupled till the ratio will get to the 200-12 months ratio of about 17:1.Gold Silver Investing\nRelated Sites : gold silver investing


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