Silver Demand In China For Wealth Protection to Climb to Record 7,700 Tons

Today’s AM fix was USD 1,715.00, EUR 1,317.71, and GBP 1,063.24 per ounce. 
Yesterday’s AM fix was USD 1,708.50, EUR 1,321.04, and GBP 1,069.28 per ounce.

Silver is trading at $32.11/oz, €24.81/oz and £19.88/oz. Platinum is trading at $1,580.75/oz, palladium at $602.30/oz and rhodium at $1,070/oz.

Gold fell $6.00 or 0.35% in New York yesterday and closed at $1,700.90. Silver dropped to $31.52 in NYC trading in the late morning but recovered in the afternoon and finished with a gain of 0.19%.

Gold moved slightly upward on low volumes Thursday as the US dollar limited gains on the heels of the US Federal Reserve’s policy statement which will continue with QE3. 


Cross Currency Table – (Bloomberg)

“The Federal Reserve on Wednesday stuck to its plan to keep stimulating US growth until the job market improves even as it acknowledged some parts of the economy were looking a bit better.  In a statement after a two-day meeting, the central bank repeated its vow to keep rates near zero until mid-2015 and its pledge to keep supporting growth while the recovery strengthens.”

That means keeping rates close to zero until mid 2015 and to provide necessary means to support growth while the US economy recovers.

This morning the UK Q3 GDP figures are out at 0800 GMT.

Bloomberg reports that Chinese silver demand is set to climb nearly 10% next year as investors look to preserve their wealth.

Although China as the 2nd largest world economy may be in an economic slump, investors are seeking out silver as a value alternative investment.  Silver climbed 15% this year and ETF’s holding silver have gained 6.5%. Research from Beijing Antaike said that 33% of the country’s demand comes from jewellery and coins, the rest for use in photography, solar panels electrical appliances.


XAU/USD 3 Year – (Bloomberg)

“Many producers and investors have hoarded the precious metal in the form of ingots or unwrought silver.”

After the US Fed’s QE1, (December 2008-March 2010) silver rocketed 53%, almost twice the jump as gold, and for QE2, (ending June 2011) silver rose 24%. Morgan Stanley predicts that silver will again return more than gold after QE3 was announced this September.

Chinese national statistics show that jewellery sales rose 19.3% for the first eight months compared to last year.

 “I’m bullish on silver, so I personally have stockpiled 3 tons of it at home,” Yang Guohui, president at Hunan Yishui Rare & Precious Metals Recycling Co., said in Xiamen on Oct. 17. Yishui is based in Yongxing County, Hunan province, where about 20 percent of China’s silver is from, according to Huang Xiaoming, head of the local precious metals management bureau.

The spread that Chinese investors pay to the overseas prices is $40/kilogram which is due to government tax and transportation costs.  In May 2011, this grew to over $200/kilogram on the Shanghai Gold Exchange amid mass speculation.

Chinese solar power may increase demand. The government is growing the number of installations from 2.6 gigawatts in 2011 to 21 gigawatts by 2015.

Metal output from China who is the 3rd leading producer could reach 13,000 tons this year from mining, smelting, refining and recycling, according to Wang Jian, deputy head of the China Nonferrous (1258) Metals Industry Association.

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Mark OByrne

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