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As a result of the recent sell-off, the silver prices dropped down $30 an ounce. In the wake of the collapse of a commodities broker, MF global, investors are more interested in cash. Many believe that fears of deflation and Europe’s debt crisis have enormously influenced the white metal. Some investors believe that it is a great time to invest in silver.
Silver prices have fallen due to the recent decisions from the Federal Reserve and the European Central Bank to hold back from additional monetary stimulus. On 20th December 2011, the silver price declined up to 7%, and futures traded below $30 per ounce, according to Myra P. Saefong reports at MarketWatch. Hence, the white metal witnessed degradation up to 11% for the month.
Paul Mladjenovic, an author of Precious Metals Investing for Dummies, said: “In the latter half of the year, panic selling at both the personal level and institutional level brought silver down as investors had increased anxiety over world economic events.” The prices of gold are fluctuating, but silver has got deflated until now.
Mladjenovic further added: “Since silver is also an industrial metal and silver is a smaller market, panic selling has a more pronounced effect, and the moves are more violent.”
Some analysts believe that the silver prices will end at $31 an ounce at the end of 2011, which is a good sign. However, the white metal can also close out under $31. Therefore, it is better to think twice before investing in silver.
James Carrillo, a senior portfolio adviser for Swiss America Trading Corporation, said: “The long term trend could be over, and support won’t come until prices reach the $20 level.” The prices of silver underwent huge alteration between 2010 and 2011. To prevent inflation risks and financial uncertainty unleashed by the Eurozone debt crisis, many small inventors invested in “poor man’s gold.” Because of increasing silver demand, it had driven fears for fluctuation in prices. However, the white metal has enormously dropped down from $50 an ounce.
The iShares Silver Trust and the ETFS Physical Silver Shares are the two largest ETFs tracking silver. The ETFs are down about 7% year to date and have fallen 11% the past month. According to the estimations, Gold and silver ETFs had set to open higher on 19th December 2011. The Wall Street Journal reported, “The silver prices will make solid profits in 2012.”