Silver Posting Best Streak Since Hunts No Matter Which Way Economy Turns
Silver, the precious metal most used in industry, is attracting investors betting on both faster and slower economic growth as prices extend the longest run of quarterly gains in three decades.
Doubling as a store of value for buyers concerned about the economy and as an industrial material for those bullish on growth, silver is outperforming metals from copper to zinc this year and keeping pace with gold. It will rise as much as 15 percent to $22 an ounce before December, from $19.145 today, according to Daniel Brebner, an analyst at Deutsche Bank AG whose fourth-quarter outlook was accurate to within 0.7 percent.
While the Federal Reserve warned last week that financial conditions are “less supportive” of growth, investors held a record amount of silver in exchange-traded products backed by the metal, Barclays Capital data show. Options giving traders the right to buy the metal at $25 before Nov. 23 are the most widely held on the Comex in New York.
“Silver is really attractive because you have strong investment demand and strong fabrication demand,” said Jeffrey M. Christian, the managing director of CPM Group, a research company in New York. Silver rose 68 percent since he recommended buying the metal in a Bloomberg interview in October 2008. “You buy gold when you think the world is going to hell in a handbasket. You buy copper when the economy is booming. In between those two, if you’re a bit confused, you buy silver.”
The metal, used to create the first telegraph messages, rose 9.5 percent since the end of March, heading for a sixth quarterly advance. That’s the best streak since 11 consecutive quarters through the beginning of 1980, a year after the Hunt brothers tried to corner the market.
While gold reached a record $1,265.30 an ounce on June 21, silver would have to more than double to get to the all-time high of $50.35 reached in New York in 1980. Silver rose 13 percent this year in London, gold added 14 percent and the London Metal Exchange Index of six industrial metals fell 9.2 percent.
Silver will trade as high as $21 by the end of this year, according to the median in a Bloomberg survey of 27 analysts and traders. Open interest in the call options expiring in November to buy at $25 was almost 7,200 contracts June 25. The next biggest positions are the call options for $20 and $30 by the same date, Comex data show.
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