Silver surges to 31-year high, gold hits new record

Silver today surged to a 31-year high (over 5%) to above $49/oz. Precious metals prices keep rising due to an increased demand on a global level as well as higher inflation.

10:33AM BST 25 Apr 2011
The Telegraph

The spot price of silver surged more than 5pc to just above $49 ounce on Monday, buoyed by a weak dollar and strong physical demand in Asia that also propelled gold to a record high for a seventh consecutive session.

Spot silver hit a 31-year high of $49.31 an ounce, 17 cents off its 1980 record, and was heading for its biggest daily gain in five months.

"Everyone is buying," said a Hong Kong-based dealer. "There is stop-loss buying, as well as a good buying interest from China."

US silver futures also jumped, 8.2pc to $49.82 an ounce – about 50 cents off its all-time peak of $50.35 hit on January 18, 1980.

Silver prices have climbed nearly 60pc so far this year, after jumping more than 80pc in 2010, outpacing gold's 7pc rise and the 10pc gain in the 19-commodity Reuters-Jefferies CRB index.

Silver's astounding run has attracted big and small investors. Holdings in the world's largest silver-backed exchange-traded fund, iShares Silver Trust, have risen by 2.4pc so far this year, compared to a 4pc decline in the holdings of SPDR Gold Trust, the world's top gold ETF.

Buying interest in physical silver has also jumped in India, where gold is traditionally favoured as a storage of wealth. "The rally has been great as traders are buying silver like mad," said an official at a private bank in India.

"We normally don't import silver on a regular basis, but we imported about 10 tonnes from last month. Investors are joining in the rally in India to catch on the price appreciation."

Spot gold hit a record high of $1,518.10 an ounce. US gold futures also rose to an all-time high, at $1,518.6.

"It's the dollar play," said a dealer based in Singapore. The dollar index languished around its three-year low on Monday, with investors expecting further weakness as the upcoming Federal Reserves' policy-setting meeting is likely to announce the continuation of low interest rates.

The escalated violence in Syria and Yemen over the weekend also helped lift gold, seen as a safe haven during time of turmoil.

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