Silver Takes Some of Gold’s Limelight

August 7, 2012 – Silver has been one of the best performers in precious metals this year and looks to continue the upward trend by stealing some of the spotlight from gold as investment and industrial demand for the white precious metal continues to rise.

According to Julian Philips, a South Africa-based editor with, we could see a spectacular rise in silver. In addition to the supply and demand disjoint in silver, we will see a huge investment demand continue to play a major role in the market, according to Philips’ analysis.

Silver futures are trading above $32.60 per troy ounce, up 18 percent for the quarter to date and up 17 percent from prices at the end of 2011. Gold, while up an impressive surge to more than $1,700 per troy ounce, has only seen a quarter-to-date gain of 6 percent and less than a 9 percent gain for the year, markedly making silver the better performing metal thus far.

Elliott Orsillo, co-founder and portfolio manager at Season Investments LLC, has reiterated the major point that investors view precious metals like silver and gold as the best hedges against the debasement of paper currencies.

The major moves in gold and silver in the past week have largely been attributed to expectations for more monetary easing policies from the European Central Bank and the U.S. Federal Reserve. The inherent effect of the monetary easing policies is a tendency towards the devaluation of currency, which strengthens real assets. The most tangible real assets we have in this market are precious metals.

Orsillo did warn that the market might have gotten little ahead of itself in terms of expectations for those policy announcements. If that is the case, we may see a pullback and possibly a good entry point for silver in the next few sessions.

Dawn Bennett, portfolio manager of the Bennett Group of Funds, put it in other words, saying quantitative easing acts as a catalyst for the precious metals.

The second round of Quantitative Easing from the U.S. Federal Reserve lifted gold to a close of almost $1,900 per troy ounce and brought silver close to $50 per troy ounce in 2011.

A third wave of QE is predicted to have an even greater impact in both precious metals and may retest, if not surpass, the 2011 highs, according to Bennett.

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