Gold News

Switching to Silver from Gold?

Are high Gold Prices driving consumer & investor demand for silver...?

THE MODERATOR of supply and demand is supposed to be price, right? says Brad Zigler at Hard Assets Investor.

Well, this week's report on third-quarter demand from the World Gold Council ought to be a real head scratcher then. Because supplies of gold were down 5% from year-ago levels, says the Council, while demand fell 34%.

Year-over-year, in fact, physical gold demand, in volume terms, dropped in each of gold's three market segments:

  • Gold Investment: down 46% vs. Q3 2008;
  • Gold Jewelry: down 30%; and
  • Industrial Use: down 11%.

Gold Prices, however, have risen universally. In key markets such as India and Turkey, they spiked 15% and 33% respectively between July and end-Sept. In Dollar terms, gold rose 12% year-over-year, while Euro prices rose 11%.

Thus the bull market may have put gold out of reach for many consumers. And that may account for some of the renewed interest in "the poor man's gold" – silver.

Since Monday this week, silver has made its first significant break-out move – relative to gold – since August. The 60-times level for the Gold/Silver Ratio looks likely to be challenged.

And a sustained decline in the price of gold, measured in ounces of silver, would signal the end of a 16-month cycle.

Ready to Buy  Gold... is a research-oriented website devoted to sharing ideas about investing in the natural resources sector. Published by Van Eck Associates Corporation, the site offers an educational resource for both individual and institutional investors interested in learning more about commodity equities, commodity futures, and gold – the three major components of the hard assets marketplace.

See full archive of Hard Assests Investor.

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