Late last year, analysts were touting the metal's promise as a much cheaper investment alternative to gold that was poised to see higher industrial demand. Some even predicted a price climb above $20 an ounce by the end of 2009, but instead, prices dipped below $15 in February. See previous Commodities Corner on poor man's gold.
The label of poor man's gold does not mean it behaves exactly like gold. While silver tends to follow gold, it carries a slightly different risk profile. In layman's terms, when the carry trade is on and giddiness pervades on Wall Street, silver is the place to be. When the carry trade is taken off and the hammer drops on Wall Street, silver takes it on the chin in comparison to gold.
Those with patience will be rewarded in both gold and silver.
Silver, London P.M. Fixed:
Gold, London P.M. Fixed:
As consensus expectations begin to tire with silver, it does so while money quietly positions for another run. When the train leaves the station, it tends to do so with the least amount of passengers.
Silver London P.M. Fixed and the Commercial Traders COT Futures and Options Gold Diffusion Index (DI):
Source: marketwatch.com
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