There is an increasing tendency among smaller investors and retail traders. Since gold is too expensive, they prefer to put their assets into silver. At present, one ounce of gold costs about $1,700, while the price of silver is approximately $32.00. Small investor would rather buy 53 silver ounces than one ounce of gold. On the other hand, retail traders benefit from silver’s notorious volatility.
It is obvious that demand for silver is increasing with the recovery of the global economy. Investors are now more optimistic and expect better returns from 2013. Not long ago, the sales of Silver Eagle coins in the United States were stopped. The US Mint made this move because coins were running out of stock. In January, the US Mint reported an all-time monthly high purchase of American Silver Eagle coins. The overall sales hit 7.1 million ounces of silver. Back in January 2012, the coins sales were worth 6.1 million ounces of silver. It seems, more Americans now want to put their money into silver. Not only the number of investor rose, but also the quantity of buying. Market players are purchasing whole unsealed 500-ounce boxes by the US Mint. That is the latest trend on the market.
However, the Americans are not alone in their preference for physical silver. Chinese are also stocking up, as the country’s economy expands and they expect the demand for silver as an industrial metal to increase. In additional, the major manufacturers of sterling silver jewelry are located in China and they face rising demand.
Higher demand for silver is observer not only by the US Mint. The Royal Canadian Mint also reported increase in Silver Maple Leaf coin sales. According to Canadian Mint officials, the demand for Silver Maple Leaf coins is very high. The Mint cautiously runs the supply management. That way the bullion distributors are well served and orders keep steady pace.
Investors and traders are closely following news about silver, because the metal is not so expensive now. Many expect a significant price rise due to a number of reasons.
Elsewhere, central banks continue to buy gold as a hedge against inflation and this shopping spree supported the rush for gold in the past. Persistent money printing by central banks worldwide is observed since some time now. Japan, South Korea and Russia are reportedly raising their money supply level. Every month the US Federal Reserve spends $85.0 billion mortgage-backed securities and government bonds. That expenditure is printed monthly.
Silver price is by now long-expected to rise and it will eventually do so. The more important question is how far would it go. Back in 2011, the white metal’s price touched over $50.00 an ounce for a brief period of time. Back then, some attributed the spike to speculations. Others feel it is unjust that silver remains so undervalued, while gold skyrocketed during the past 12 years. Occasional articles present views that silver price would reach $90 per ounce.
From a practical point of view, it is not feasible to expect higher than 25% price increase in the short term. If traders can get a better profit margin elsewhere, like for example on the Dubai Financial Market, it might be more feasible to move into stocks.