Silver Investment Demand Surges 30% As Silver ETF Holdings Robust

Today’s AM fix was USD 1,577.00, EUR 1,049.10 and GBP 1,204.18 per ounce.Yesterday’s AM fix was USD 1,580.50, EUR 1,213.25 and GBP 1,054.02 per ounce.

Silver is trading at $28.81/oz, €22.04/oz and £19.24/oz. Platinum is trading at $1,604.50/oz, palladium at $760.00/oz and rhodium at $1,200/oz.

Gold fell $5.70 or 0.36% closed at $1,577.70/oz. Silver slid $0.19 or 0.65% to $28.86. 

 Gold and Silver ETF Holdings

Gold appears to be consolidating just below the $1,600/oz level. It is 0.3% higher in dollar terms for the week, 0.4% higher in pound terms and 2.3% higher against the yen which has fallen sharply this week. 

While it is 5% lower YTD in dollar and euro terms, it has risen nearly 2% and 4% in pound and yen terms so far in 2013. 

Cross Currency Table – (Bloomberg)

Physical demand continues to be supportive of gold according to UBS. In their note today they say that physical demand prospects out of China remain positive in the weeks ahead. UBS said Asia remains a net buyer and although premiums on the Shanghai Gold Exchange have fallen, volumes remain elevated.

Meanwhile Chinese banks are also buying gold in international markets.  The spread between Shanghai and spot gold prices narrowed from about $20 an ounce over the past few days to below $15. Reuters reported that there was "strong buying from Chinese banks" in the overseas market which had helped push up the premium in onshore prices.

Silver is outshining gold in the market for exchange-traded products as global demand for the white metal gets a boost from industrial consumption amid signs of an economic recovery, CPM Group Inc. said.

The Bloomberg Chart of the Day shows silver tonnage in exchange- traded funds backed by the metal rose for four straight months, while holdings for gold ETPs dropped in January and February. 

Silver futures may jump 20 percent this year to $34.50 an ounce from yesterday’s settlement of $28.808 in New York on investment demand and industrial use, said Rohit Savant, a senior commodity analyst at the New York-based research company.

“People have been buying silver both as a base and precious metal,” Savant said in a telephone interview with Bloomberg. “Economic demand will push prices higher.”

Gold GBP YTD – (Bloomberg)

About 53% of silver is used in industrial products from televisions to batteries, according to the Silver Institute in Washington. Some investors may buy the metal as a “cheaper alternative to gold”, and investment demand has climbed 30% this year, Societe Generale said in a report on March 4.

Holdings in silver ETPs rose 3.6 percent in the two months ended Feb. 28, reaching a record 19,699 metric tons on Jan. 18, data compiled by Bloomberg show. Last month, assets in gold ETPs fell 4.1%. 

Silver GBP YTD - (Bloomberg)

Sales of American Eagle silver coins by the U.S. Mint jumped to a record in January and more than doubled in February from a year earlier, the Mint’s website showed. China’s imports of the metal surged 14% in January, the biggest monthly gain since July.

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