Silver prices rose sharply during May as industrial demand picked up and exchange-traded-fund investment was strong, said Mitsubishi. “With industrial demand returning and the investment case for silver predicated on the same macro factors as those for gold, investors in the ETF market have been emboldened to increase their holdings,” Mitsubishi said.
Comex July silver was trading at $18.29 as of 8:45 a.m. EDT, well up from the settlement of $14.973 on the final day of April. Some of silver’s recovery was an “overdue technical move,” while some was a play on the gold-silver ratio, Mitsubishi said. “Investors have loaded up on silver ETF holdings to the tune of 54 Moz (7.5%) since the beginning of May, and silver’s shine is largely coming from its role as a cheaper alternative to gold at a time of ultra-low interest rates, exceptional market risks and rising inflation,” Mitsubishi said.
“Non-commercial futures positioning on Comex remains generally bullish but with lower levels of participation, perhaps due to investors shifting their speculative longs into physical ETFs amid recent futures market dislocation. As the world emerges from the first wave of COVID-19, it is important to remember that silver remains not just a portfolio diversifier alongside gold but an important industrial commodity in its own right – one that has a largely underappreciated role as a catalyst in the production of ethylene oxide for use in, among other things, plastics for personal protective equipment, and as an anti-bacterial and anti-viral agent in a variety of coating applications.”
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