Silver fell to its lowest levels since September 2010, marking the biggest slump in four years. The sharp fall in silver resulted in the highest silver to gold ratio in about 33 months, reports Bloomberg.
Making it the worst performer among the metals, silver has fallen 28 percent this year. The fall reflects that only industrial use is not enough to keep the prices up.
In exchange traded products, holdings in the precious metal fell to a four-month low on May 17. To gain from the fall in prices, hedge funds have increased their investments the most since March.
Silver futures for delivery in July, were down around 9.4 percent to $20.25 an ounce and was at $21.685 by 7:48 a.m. on the Comex in New York. In London, silver for immediate delivery fell 2.3 percent to $21.7522.
Reasons for the fall in Silver
Terming silver as a ‘poor man’s gold’ an analyst at Societe Generale SA (OTCMKTS:SCGLY) told that precious metals have been under pressure recently, this may have pilled the prices down. Silver is also an industrial metal, therefore, concerns over slowing growth have also contributed to the fall.
There have been talks that some unidentified investor sold his massive holding of silver during the illiquid early Asian hours, which somewhat contributed to the fall in prices.
Some of the experts are also hinting an appreciation in Yen during early Asian trading hours, to be a responsible factor for the fall in silver prices. Japan’s Economy Minister Akira Amari stated earlier that the correction in the currency is over, and any more weakness will not be in the interest of the economy, this may have lifted the sentiments. A lower USD/JPY may have left many investors to sell their future positions in silver to cover the positions on the yen.
The prices of the precious metal could also have declined over the speculations that Federal Reserve’s quantitative easing program may end earlier than expected owing to improving U.S. economic outlook.
Silver, which is used in solar panels and batteries, also moved to a bear phase in April. Global photovoltaic installations reported a marginal rise, marking the slowest growth in at least six years, in 2012. Also, as per a report from Natixis, slow solar-panel sales in Europe will also lower the industrial demand for silver.
Gold also Down
For gold, prices are again down, marking the worst performance since March 2009. Gold with June delivery was down about 2.1 percent to $1,336.30 an ounce, lowest since April 18.
Gold fell into a bear market last month, down about 19 percent this year. Investors lost confidence in the yellow metal as the safest investment, resulting in the rise of equity market backed by improving US economy.