The Conversation (0)
Silver Investing News spoke with Jason Goulden, V.P. of Research at Metals Economics Group, and with Michael DiRienzo, Executive Director of The Silver Institute, about the factors currently playing a role in the silver market.
By Michael Montgomery – Exclusive to Silver Investing News
Silver Investing News spoke with Jason Goulden, V.P. of Research at Metals Economics Group, and with Michael DiRienzo, Executive Director of The Silver Institute, about the factors that are currently playing a role in the silver market.
Uncertainty fuels hard asset investing
Although the August 2nd deadline is fast approaching and a resolution to the debt ceiling seems to be stuck at a roadblock, most analysts predict that a vote to raise the ceiling is almost certain, denouncing the delays as political posturing. Regardless of the maneuvering by legislators, the price of silver is sensitive to the headlines.
Michael DiRienzo shared his view on the increasing desire for hard assets to protect investors’ portfolios “Those that are invested in silver are looking at a couple of different factors. Mainly, the strength of the dollar overseas and what is happening politically and economically across the globe. People are feeling more and more comfortable putting a portion of their investment portfolio into hard assets.”
Lawmakers in the US will likely resolve the debt ceiling issue by the deadline, as failing to raise the limit will have severe consequences for the US economy. When a resolution does get passed, a correction in silver prices may be the consequence.
Jason Goulden stated that a correction could come to “commodities in general, if the debt ceiling is resolved in a suitable manner. People should remain skittish for a while. However, people’s memories are generally short; investment tends to normalize quickly after events such as this. You may see a dip in price, but it probably won’t be long trough.”
Long term outlook
Investment demand for ETFs and physical silver coins due to inflation fears is increasing worldwide and will remain strong even after US lawmakers have found a compromise. The anxiety about loose monetary policy, deficits, and a 14 trillion dollar debt will continue to be a supporting factor in the price of silver and gold.
“If you look at coin sales across the globe, whether it is the Austrian, British, or the US mints, they can’t keep the coins on the shelf. American Eagle coins are sold out before the mints get their next shipment,” stated DiRienzo, adding, “When you couple the investment demand with growth on the industrial side, silver is growing by leaps and bounds.”
On Friday, the Hong Kong Mercantile Exchange (HKMEx) started trading silver futures contracts, giving Asian investors direct access to the metal. This will prove to be a highly bullish factor for silver in the long term as silver demand in China grew 67 percent in 2010, accounting for approximately 23 percent of global silver consumption.
“The more people have access to taking a position in silver, the better off the fundamentals will be. The growth of silver demand in China is incredible, it’s a country that cannot be overlooked,” stated DiRienzo, adding, “Silver is firing on all cylinders, on the investment side, and on the industrial side.”