As soon as on Monday silver exceeded $30 per ounce for the first time since 1980, traders and analysts started questioning the bullish tendency.
Silver and gold have been popular with investors as safe assents under the long-lasting crisis in the Euro zone and the perspectives of the Fed Reserve’s further quantitative easing. Moreover silver is also popular with investors because it is used in industrial production.
Despite the fact that gold has recently reached its record-breaking price level, which is $1430 per ounce, silver has “defeated” gold in terms of profitability, i.e. $100 of investments will bring $180 (+80%) for silver and $130 (+30%) for gold.
The future mid-term movement of silver may be affected by the following factors:
· The reduction of silver reserves, increased market interest, the Fed Reserve’s policies and the Euro zone crisis speak in favor of its uptrend. In 2011 silver is expected to be in deficit as the global economy is expected to continue recovering, which means that the demand for silver will be strong.
· The production of silver has been reduced over the last few years as numerous industries have shown little demand for it lately. So the prices are conditioned by investment demand, not by industrial one, which definitely doesn’t favor the uptrend of silver.
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