Tags: Chinese Speculators Said to be Fueling Silvers Volatility

Chinese Speculators Said to be Fueling Silver's Volatility

Monday, 16 May 2011 08:21 AM

Chinese speculators are responsible in part for silver's recent run through incredible peaks and valleys, analysts say, with trading in Shanghai markets soaring nearly 30-fold since the start of the year.

Global silver prices have surged 175 percent from August to approach $50 a troy ounce two weeks ago, and have then plummeted nearly 35 percent to $32.33 shortly afterwards, the Financial Times reports.

Meanwhile, silver turnover on the Shanghai Gold Exchange has soared 2,837 percent from the start of this year to a peak of 70 million ounces in April, according to exchange data.

silver200getty.jpg
Silver prices have surged.
(Getty Images photo)
Chinese investors were "one big factor behind silver’s rally, particularly in April," says Edel Tully, a precious metals strategist at UBS, according to the Financial Times.

New York and London still remain the hubs for silver trading, with turnover in New York silver futures averaging about 700 million ounces a day in April.

Yet the market is keeping an eye on China.

"I’m pretty certain it’s the Chinese retail [investment] that is driving this move," one senior precious metals banker tells the newspaper.

"There's an enormous amount of speculation going on out there, they’ve got the bit between their teeth."

The metal serves as a hedge when paper currencies weaken and inflation threatens and has industrial uses as well.

Despite recent volatility, some say silver is due to shoot upwards again and break $50 an ounce.

"You’re still in an uptrend, despite the sharp sell-off" technical analysis shows, says Mary Ann Bartels, the head of U.S. technical and market analysis at Merrill Lynch, according to Bloomberg.

"The uptrend was not broken."

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Chinese speculators are responsible in part for silver's recent run through incredible peaks and valleys, analysts say, with trading in Shanghai markets soaring nearly 30-fold since the start of the year. Global silver prices have surged 175 percent from August to approach...
Chinese Speculators Said to be Fueling Silvers Volatility
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2011-21-16
Monday, 16 May 2011 08:21 AM
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