From June 2nd 2012
The increase in the price of silver on Friday was not as dramatic as that of gold. I’ve already seen some comments in the media about the fact that it is the ‘industrial metal’ aspect that is weaker because the global economy is showing signs of turning down.
But we need to remember that for the past year the U.S. was supposed to be in recovery mode, and that China has ostensibly been growing in the upper single digits.
And yet the price of silver declined during this ‘recovery’ period.
Now that the economic indicators are looking very weak gold has helped to pull silver up again, within striking distance of $29.
It’s the paper spot game that has been driving the silver price up and down – ‘short and cover’ – in a mechanical and cynical weekly trading routine.
One thing is for sure, once the economic downturn takes hold base metal mining volumes will tail off and the 70% of silver output associated with those metals will likewise fall.
On the other hand I can’t see silver investor demand dropping off. If anything the fear factor will act as an accelerant.