Silver—Two Sides of the Story

By David Morgan
20 June 2008 @ 10:05 am EDT

What drives the price of silver? Certainly it is a function of buying and selling pressure, and primarily, this price setting mechanism takes place on the COMEX. However, so much has been written recently about short selling, price management, and naked sales, and on and on, that I wanted to take a more basic look at demand. Real demand and investment demand, regardless of how the price is set, fall into two main categories. We have investment demand (monetary demand), and we have industrial demand. In this year’s World Silver Survey 2008, sponsored by the Silver Institute, under the Investment Chapter it states, "Investor activity was the main driver of the high and volatile silver price in 2007."

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