Silver Futures Enter Bull Market as Prices Jump to 10-Month High

Silver Jumps to 10-Month High, Enters Bull Market
  • Volume in New York is more than double average for time of day
  • Investors pour cash into `devil's metal,' approaching record

Silver entered a bull market after climbing to a 10-month high amid positive signs for Chinese industrial demand and decreasing bets the Federal Reserve will raise U.S. interest rates.

China’s economy stabilized in the first quarter as gross domestic product rose 6.7 percent from a year earlier, boosting speculation that demand won’t slow for industrial metals. Investors are betting there’s a 55 percent chance Fed officials will increase rates by the end of 2016, down from 93 percent at the beginning of the year. Lower rates are a boon to precious metals, which don’t offer yields or dividends.

Silver, which has more industrial uses than gold, has risen 23 percent this year, outpacing gains in the yellow metal. Investors have been pouring cash into silver, known as the devil’s metal because of its often wild price swings.

“The market has spotted a shiny gem among the stones and is trying to capitalize on the fact that silver historically has very sharp moves,” Tai Wong, the director of commodity products trading at BMO Capital Markets in New York, said in a telephone interview. “The rally in base metals is also helping silver specifically, given its significant industrial applications.”

Gold-Silver Ratio

Silver futures for May delivery gained 4.4 percent to settle at $16.972 an ounce at 1:50 p.m. on the Comex in New York. That marks a more-than 20 percent gain from a recent closing low in December, meeting the common definition of a bull market. The metal touched $17.11, the highest since June.

Aggregate trading in Comex silver was more than double the 100-day average for this time, according to data compiled by Bloomberg.

The gold-silver ratio fell to the lowest this year. Assets backed by silver in exchange-traded funds are approaching a record and last month total holdings increased 5.2 percent, the biggest jump since 2010, according to data compiled by Bloomberg.

In ETFs and other precious metals:

  • Holdings in exchange-traded funds backed by gold were little changed at 1,765.3 metric tons on Monday, according to data compiled by Bloomberg.
  • Gold futures for June delivery rose 1.6 percent to $1,254.30 an ounce on the Comex
  • On the New York Mercantile Exchange, platinum and palladium gained.
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