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Silver is near 18-year high
Silver is near 18-year high
Silver closed at an 18-year high of $8.62/oz on Friday, its
highest price since August 1987, amid growing demand from
electronics makers and jewelry fabricators, as well as speculative
buying. This price rally is expected to continue well into
next year, according to Macquarie Bank.
Silver’s price has gained 25% this year, after advancing
almost 15% in 2004. Silver prices will rise in the next five
years as demand in China expands faster than supply, fueling
imports for jewelry, electronics and photography, according
to research group GFMS Ltd. Meanwhile, Macquarie Bank’s
latest precious metals report expects silver to remain above
$8/oz into the first half of 2006, before gradually declining
to around $7/oz in 2007. The report notes that silver’s
price is influenced much more by industrial activity than
gold, for example, since fabrication demand for silver accounts
for 66% of total consumption, compared with 25% for gold.
The report also dismisses the often-discussed ratio between
gold and silver prices as a barometer for silver prices. "Judging
purely from a scarcity value—the amount of gold and
silver, existing as reserves and resources—gold should
be valued around 19 times higher per ounce than silver,"
the Macquarie report notes. "However, over the last few
years, the gold/silver ratio has hovered around 60:1. It is,
therefore, unlikely that the gold/silver ratio alone will
give any hint as to where the silver price should stand."
© 2005, Reed Business Information, a division of Reed
Elsevier Inc. All Rights Reserved.
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