Yeah!
On Mar 2, 9:34 am, xi <[email protected]> wrote:
> My comment: I do not recommend them for people who bets on short term,
> of course. I do not know how they will behave in the short term.
> However, they have no option but to raise in the long term.
>
> These news are intereting to catch the overall sentiment. That is why
> I post it.
>
> Peace and best wishes.
>
> Xi
>
> March 2 (Bloomberg) -- Silver’s biggest discount to gold in 13 years
> has investors betting on the best annual return for silver since the
> Hunt brothers’ bid to corner the market in 1979.
>
> Money managers are buying precious metals as a refuge from the 47
> percent drop in the Standard & Poor’s 500 Index in the past year and
> growing concerns that Treasuries will fall as the U.S. government
> pledges $9.7 trillion to revive the economy. While gold will rise 25
> percent this year, silver may jump 58 percent to $18 an ounce, said
> Philip Klapwijk, chairman of London-based precious metals research
> company GFMS Ltd.
>
> “Silver will have a nice catch-up rally,” said Peter Sorrentino, who
> helps manage $15.5 billion at Huntington Asset Advisors in Cincinnati.
> “There’s a flight to precious metals as a storehouse of wealth. Silver
> got left behind and it’s been closing in quickly but there’s still a
> performance gap.” Huntington has about 7 percent of its assets in
> silver and 3 percent in gold, which is trading $80 an ounce below its
> record.
>
> Gains would benefit Fresnillo Plc, the world’s biggest silver
> producer, Hochschild Mining Plc of Lima and Vancouver- based Pan
> American Silver Corp. Export revenue would climb in Peru and Mexico,
> the largest silver-mining nations. Eastman Kodak Co. faces higher
> costs for photographic materials.
>
> The last time silver did better than gold was in 2006. So far this
> year, commodities, as measured by the Standard & Poor’s GSCI Index of
> 24 contracts, fell 3.7 percent, adding to the 43 percent plunge in
> 2008, the worst loss since the gauge was introduced in 1971.
>
> ‘Isn’t Flying Yet’
>
> Silver for immediate delivery tumbled 35 percent in the past year to
> $13.29 an ounce in London. Gold outperformed in the past 12 months,
> declining 3.2 percent to $952.58 an ounce.
>
> That made gold more expensive relative to silver. One ounce of gold
> now buys 72 ounces of silver, up from an average 58 ounces in the past
> two years. The ratio reached a high of 84.39 in October, the most
> since March 1995, according to data compiled by Bloomberg.
>
> “Silver’s woken up recently, but it isn’t flying yet,” said Chip
> Hanlon, president of Delta Global Advisors Inc. in Huntington Beach,
> California, which manages $1 billion. “As gold goes higher, it gets
> psychologically harder to pay for gold. So people turn to silver.” He
> expects silver to reach $20.
>
> Investors prefer precious metals to almost all other investments after
> more than $1.2 trillion of writedowns and losses at the world’s
> biggest financial companies sent the global economy into a recession.
>
> Losses Everywhere
>
> The S&P 500 Index is off to its worst start to a year on record. Oil
> dropped 70 percent from its record high in July and traded at $43.65 a
> barrel in New York today. Treasuries, which returned 14 percent last
> year as investors sought the safety of government debt, are down 3.6
> percent this year, according to Merrill Lynch & Co. bond indexes.
>
> Precious metals are also improving on concern U.S. President Barack
> Obama’s $3.94 trillion spending plan will spark inflation with a $1.75
> trillion deficit that will lead to a surge in sales of government
> bonds.
>
> Prices of Treasuries show traders are increasing bets for accelerating
> inflation. The difference between yields on 10-year notes and Treasury
> Inflation Protected Securities, which reflects the outlook for the
> consumer price index, widened to 99 basis points on March 2 from 9
> basis points on Dec. 31. A basis point is 0.01 percentage point.
>
> ‘Poor Man’s Gold’
>
> U.S. gross domestic product contracted at a 6.2 percent annual pace in
> the fourth quarter, faster than the 3.8 percent previously estimated
> and the most since 1982, the Commerce Department said Feb. 27. The
> unemployment rate rose to 7.6 percent in January, the highest since
> 1992, according to government figures.
>
> “Silver is poor man’s gold, and there’s a lot more poor men than there
> used to be,” said Doug Hepworth, director of research in New York at
> Gresham Investment Management LLC. “Gold and silver are the only
> commodities that can overdo it in this environment.”
>
> Silver jumped to $50 an ounce in early 1980 from $6 at the start of
> 1979 after Nelson and William Hunt of Dallas hoarded the metal. They
> were convicted in 1988 of conspiracy for attempting to manipulate
> prices and were forced to pay $130 million in fines.
>
> Billionaire investor Warren Buffett’s investment company Berkshire
> Hathaway Inc. said in February 1998 it purchased 129.7 million ounces
> of silver. Buffett bought most of the silver for less than $6 an ounce
> starting in 1997, and sold it soon after, he said in May 2006. “We did
> make a few dollars,” Buffett said at the time.
>
> Higher Costs
>
> Peru produced 112 million ounces of silver in 2007 and Mexico 99
> million ounces, taking their share of world output to 32 percent,
> according to the Silver Institute in Washington. A $1 increase in
> silver raises costs for Rochester, New York-based Kodak by $15 million
> to $20 million, Chief Financial Officer Frank Sklarsky said on a July
> 31 conference call.
>
> While investor demand may drive silver to $18 an ounce this year, the
> returns won’t surpass gold, said Robin Bhar, an analyst at Credit
> Agricole SA’s Calyon unit in London. When investors sell silver, it
> “literally collapses” because of fewer participants in the market, he
> said.
>
> Silver is also more vulnerable to the outlook for the economy, because
> industrial consumption including electronics, batteries and soldering
> made up 54 percent of demand in 2007, according to the Silver
> Institute.
>
> Investor Demand
>
> Investor demand through exchange-traded funds will climb 52 percent
> for silver this year as government sales fall 32 percent and mine
> production stays little changed, Morgan Stanley analyst Hussein
> Allidina in New York wrote in a Feb. 25 report.
>
> Assets in the Barclays Plc IShares Silver Trust, the biggest exchange-
> traded fund for silver, increased 20 percent this year to a record
> 8,180.46 metric tons. Hedge funds and other large speculators
> increased their net-long positions, or bets New York silver futures
> will gain, to 25,207 contracts this year, up 27 percent from 19,795 in
> the week ended Dec. 30, according to the Commodity Futures Trading
> Commission.
>
> “If enormous doom and gloom overwhelms financial markets, if you see
> investors are incredibly bearish and the Dow trading at 5,000, silver
> could get as high as $24,” said Jeff Christian, managing director of
> CPM Group in New York. The Dow Jones Industrial Average ended last
> week at 7,062.93, down almost 20 percent this year.
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