Saturday, 7 April 2012

Silver: Poor Man MCX Gold Turning to fool's Gold?

Silver bulls may be hoping that the metal's healthy first-quarter price rise is the first step back towards record highs. Not so fast. More Information about mcx today tips visit the site

Its advocates say silver, which occupies a middle ground between industrial metals like copper and investment vehicles like gold, can benefit both from the fledgling economic recovery that is lifting copper and from the investment that is driving gold.

But record-high mine supply and questions over demand have left a long shadow over silver's underlying fundamentals, while huge price volatility last year, when the metal crashed 35% in a matter of days on two occasions, has undermined its appeal to investors as a cheaper alternative to gold.

Silver hit a record near USD 50 an ounce a year ago on the back of rallying gold prices, after precious metals became increasingly in demand as policymakers and markets struggled to recover from the financial crisis.

A recovery in MCX gold prices this year after late 2011's washout and decent seasonal coin-buying in January have helped silver to outperform other precious metals.

But gold itself is looking like less of a safe bet than it once was. As expectations for a fresh round of quantitative easing have receded, prices have surrendered gains and are now little better than flat on the year.

Fragile confidence

There is undoubtedly some good news for silver. Confidence in the US recovery remains fragile, and any fresh signs of a downturn could fuel speculation of further quantitative easing, lifting gold and consequently silver.

But overall, the picture for silver is darker this year than it was 12 months ago, and other metals have greater appeal. While prices may rise again, peaks are likely to be lower and shorter-lived than 2011's highs.

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