INVESTMENT, industrial and jewelry demand is driving up Silver Prices faster than gold in the current bull run, gaining 18% so far in 2010 against gold's 14% rise in US Dollar terms, according to market analysts.
"Silver Prices generally outperform gold in a bull run," said Rhona O'Connell, managing director of GFMS Analytics in London, speaking to the Platts metals-information service on Wednesday.
"Speculators/investors may be positioning accordingly, and have been doing so for the past few weeks on a medium-term view," O'Connell believes, citing a sharp increase in bullish bets on the Silver Price by speculative players in US futures contracts.
With Silver Prices now trading at 30-month highs, Silver Investment demand on the US futures market stands at a 32-week high, she O'Connell told Platts.
"The choice of gold versus silver depends on an investor's view of the outlook for the global economy," wrote Martin Li, companies writer at the UK's Investor's Chronicle magazine, recently, "and whether the nascent recovery will build momentum or whether economies will slip back into recession."
This is because "Silver has many more industrial applications than gold," says Li, "whereas the Gold Price moves largely independently of industrial demand...more a function of macroeconomics and investment sentiment."
Fundamental demand is "slightly less prepossessing" than this week's 30-month highs in the Silver Price might suggest, GFMS Analytics' O'Connell said today, noting "patchy economic numbers from both Europe and the US, but good Chinese figures are supportive.
With the traditional post-harvest Hindu festival season now underway, "Silver physical demand from India remains strong," says Standard Bank's senior commodities analyst Walter de Wet in his daily note, supporting O'Connell's view that Silver Prices are "benefiting precisely as the poor man's gold."
Costing 65 times as much as silver per ounce, gold typically finds its strongest global demand amongst Indian households, but now stands at record highs against the Rupee.
"[Gold] may be out of reach of some," says O'Connell, "at least until they get used to the new higher range."
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