SGS Notes: Thursday, Aug. 26th was the expiration date this month for Options…traditionally, gold and silver prices DROP on this day every month... The day began with silver priced just around $19/oz… price ROSE to almost $19.20 then closed the day at $18.92… some forecasters were watching this with interest as a sign that the long manipulation of precious metals is coming to a close.
Silver `Looking Cheap' Lures Investors, Prompting Decline in Ratio to Gold
Glenis Sim, Bloomberg
August 26, 2010
The ratio of gold to silver dropped to a three-week low after gold's rally to the highest level in eight weeks prompted some investors to buy the white metal.
An ounce of gold bought as little as 64.96 ounces of silver today, the lowest amount since Aug. 5, according to Bloomberg calculations. Silver has outperformed the yellow metal since Aug. 23, gaining 6 percent compared with gold's 1.4 percent gain, as investors bought the white metal because of its relative cheapness to gold.
"Silver is unique in that it is a precious metal and an industrial metal," Wallace Ng, executive director of commodities at ABN Amro Bank NV in Hong Kong, said today. "Gold is traditionally viewed as a safe haven but silver is never far behind as a second choice."
Silver for immediate delivery rose as much as 1.1 percent to $19.11 an ounce, the highest price since June 28, and last traded at $19.0525 at 3:33 p.m. in Singapore. Gold was little changed today after climbing as high as $1,241.50 an ounce yesterday, the highest price in eight weeks.
Holdings in the iShares Silver Trust, the biggest exchange- traded fund backed by silver, increased on Aug. 24 for the first time in six weeks. The metal doubles as a store of value for investors concerned about the economy and as a raw material. Industrial applications including electrical conductors and batteries account for about half of demand.
"Silver is looking cheap and we're seeing strong investment demand for small ingots, as well as good industrial demand from solar-panel makers," Dick Poon, Hong Kong-based manager of precious metals trading at Heraeus Ltd., said today. The solar industry will consume up to 1,500 metric tons (48 million ounces) this year, Poon estimates.
"Even if investors are expecting another downturn, there will always be demand for alternative sources of energy," said Poon. "We could see prices back up above $20 very soon." Silver last traded at more than $20 in March 2008.
Silver lagged behind gold this month through Aug. 23, losing 0.1 percent compared with the yellow metal's 3.8 percent gain in the period, as investors turned to bullion to preserve wealth on concerns that the global economic recovery was weakening.
"We're bullish on both silver and gold," said ABN's Ng. "Even though we've see more festival demand from India in the past few years because of higher gold prices, silver can never replace gold in that market. They may buy less, but they will still buy gold and that should keep prices supported."
The wedding season in India, the world's largest gold consumer, runs from November to December and from late March through early May.
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"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless on the continent their Fathers conquered . . . I believe that banking institutions are more dangerous to our liberties than standing armies . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs."
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