Will Silver ETFs Lose their Shine in 2012?

With lots of speculations going in the market, investors are confused about the future of silver ETFs. They presume that the prices of silver and silver ETFs will slug down because of the ongoing alterations in the global market. From the market estimations, it is clearly visible that silver and silver ETFs have declined in the last few weeks. This alteration is a consequence of the gold bust, and investors are more concerned to put money in fiat currencies, which they consider is the safest form of exchange.

On the 13th of January 2012, the prices of silver declined to $29.42 per ounce, which was assumed to reduce by 1.54% compared to a day before. Because of fluctuation in the market, silver ETFs such as the iShare Silver Trust slumped 1.67% and the Global X Silver Miners ETFs, which declined 1.52% on the 13th of January 2012.

Some analysts believe that the silver will cede this year after studying 2011 evaluations that depict variation in silver prices from a record $50 per ounce climb to a drastic $ 20 per ounce cut down. Due to this situation, investors think silver will be more volatile in 2012.

Despite its volatile nature, silver has always been considered a safe haven currency like its counterpart gold. Investing in silver is beneficial despite the fiat currencies such as US Dollars, Euro Dollars and Japanese Yen, which their respective governments guarantee. Because of a large number of downgrades in metals by rating agencies and a potential global crunch in Europe, investors are no longer largely investing in precious metals to save their net worth.

As a result of the ongoing scenario in the global market and the increasing importance of fiat currencies,  precious metals are expected to become more volatile. The European Financial Crisis has duly affected the commodity market where Europe is the key ruler who knows about the white metal’s future. Despite all fluctuations in the commodity market and downgrades by S&P in the past, many countries such as France, Italy and Austria have managed to increase enough money to fulfil their obligations. Hence, the Euro as a fiat currency will stay safe and intact, which will affect precious metals like silver.

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