Silver Loses Safe Haven and Industrial Appeal
October 03 2011 - 8:16AM
Marketwired
September was not a kind month to Silver stocks, as a stronger
dollar took away much of the metal's allure. Additionally, a
slowing global economy has crimped industrial silver demand. The
Bedford Report examines the outlook for companies in the Silver
Industry and provides equity research on iShares Silver Trust
(NYSE: SLV) and Great Panther Silver Ltd. (NYSE Amex: GPL) (TSX:
GPR). Access to the full company reports can be found at:
www.bedfordreport.com/SLV
www.bedfordreport.com/GPL
Silver's dramatic September free-fall has been attributed to a
weakening trend in the Asian region on speculation that European
governments will find it difficult to contain the region's debt
crisis and reverse gains registered by the US dollar against the
euro, eroding the demand for precious metals as an alternative
investment. Precious metals prices tend to move inversely to price
of the dollar, as they lose their "safe haven" appeal.
Compounding the problems for silver stocks are heightened fears
of a double dip recession. According to the Silver Institute more
than 50 percent of Silver's use is industrial. With the economy
slowing -- last week Citigroup cut their global gross domestic
product forecasts for 2011 and 2012 as growth prospects "continue
to deteriorate quickly" -- manufacturing use for silver could
drop.
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Silver mining stocks -- which have underperformed silver prices
all year -- are also struggling. "Concerns about a possible hard
landing for the Chinese economy have weighed on mining stocks,"
David Jones, chief marketing strategist at IG Index, explains. "It
is difficult to see a catalyst for further gains in the short
term."
Great Panther Silver Limited engages in the acquisition,
exploration, and development of precious and base metal properties
in Mexico. Last month the company announced the discovery of
additional high grade silver-gold mineralization in an extension of
the Cata Mine in the core of the Guanajuato Mine Complex.
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