BLBG:Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day
Silver slid to the lowest since September 2010, sending its ratio to gold to the highest in almost 33 months, while bullion extended the longest slump in four years as investment holdings contracted and stocks rallied.
Silver slumped 28 percent this year, making it the worst-performing precious metal, on concern that industrial use isn’t strong enough at a time when demand is waning for a protection of wealth. Silver held in exchange-traded products dropped to a four-month low on May 17, while hedge funds increased bets on lower prices by the most since March in the week to May 14. Global equities reached the highest since June 2008.
“Silver is essentially a poor man’s version of gold,” Robin Bhar, an analyst at Societe Generale SA in London, said today by phone. “It’s a precious metal and precious metals are under pressure. Secondly, it’s an industrial metal. There are too many concerns about slowing growth.”
Silver for July delivery fell as much as 9.4 percent to $20.25 an ounce and was at $21.685 by 7:48 a.m. on the Comex in New York. Futures trading volume was more than double the average in the past 100 days for this time of day, according to data compiled by Bloomberg. Silver for immediate delivery in London slipped 2.3 percent to $21.7522.
Gold for June delivery slid as much as 2.1 percent to $1,336.30 an ounce, the lowest since April 18, and was last at $1,354 in New York. Prices are down for an eighth session, the worst run since March 2009. An ounce of gold bought as many as 64.89 ounces of silver in London, the highest since August 2010, data compiled by Bloomberg show.
Gold Falls
Gold tumbled 19 percent this year, falling into a bear market last month, as some investors lost faith in the metal as a store of value and equities rallied on confidence that the U.S. economy is improving. U.S. data showed last week consumer sentiment and an index of leading indicators topped estimates, while Federal Reserve Bank of San Francisco President John Williams said the central bank may begin to cut monthly bond purchases from as early as this summer.
Silver, used in products from solar panels to batteries, also entered a bear market in April. Global photovoltaic installations rose at their slowest pace in at least six years in 2012, according to Natixis SA, citing a report by the European Photovoltaic Industry Association. Weak European solar-panel sales will constrain growth in industrial demand for silver, Natixis wrote in a May 16 report.
ETP Holdings
Holdings in silver-backed ETPs dropped 70.6 metric tons to 19,299.2 tons on May 17, the lowest since Jan. 16, data compiled by Bloomberg show. Hedge funds and other speculators increased so-called short contracts by 20 percent to 21,798 in the week to May 14, U.S. Commodity Futures Trading Commission data show.
“Silver is trekking a similar path to gold,” said Yang Xuejie, an analyst at Galaxy Futures Co., a unit of the brokerage controlled by China’s sovereign wealth fund. “Investment demand is slowly falling and there are doubts about industrial demand, which is the primary driver.”
Gold-backed ETP holdings fell 8.9 tons to 2,198.3 tons on May 17, the lowest since July 2011. They’ve declined every week since February. Filings showed that Soros Fund Management LLC and BlackRock Inc. were among funds that cut stakes in the SPDR Gold Trust, the biggest gold ETP, in the first quarter. Hedge funds and other large speculators held 74,432 so-called short contracts by May 14, the most since the data began in June 2006, CFTC data show.
Palladium for June delivery was little changed at $739.85 an ounce in New York. Platinum for July delivery was 1.4 percent lower at $1,447.40 an ounce, after falling to a three-week low of $1,430.10.
To contact the reporters for this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Glenys Sim in Singapore at gsim4@bloomberg.net.
To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net
