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Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day - Bloomberg

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Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day
By Glenys Sim and Phoebe Sedgman - May 20, 2013

Silver plunged to the lowest level since September 2010, sending its ratio to gold to the highest in 33 months, while bullion extended the longest slump in four years as investment holdings contracted and stocks rallied. Silver for immediate delivery tumbled as much as 7 percent to $20.6985 an ounce, and was at $21.438 at 2:30 p.m. in Singapore. The ratio surged to 64.89, the highest since August 2010. Gold lost as much as 1.5 percent to $1,338.85 an ounce, the lowest price since April 18, and was at $1,345.95. Gold is down for an eighth session, the worst run since March 2009. Silver has slumped 30 percent in 2013, making it the worst-performing precious metal, on concern that industrial use isn’t strong enough at a time when demand is waning for a protection of wealth. Silver held in exchange-traded products dropped to a four-month low on May 17, while hedge funds and other large speculators increased bets on lower prices by the most since March in the week to May 14. “Silver is trekking a similar path to gold,” said Yang Xuejie, an analyst at Galaxy Futures Co., a unit of the brokerage controlled by China’s sovereign wealth fund. “Investment demand is slowly falling and there are doubts about industrial demand, which is the primary driver.” Silver tumbled into a bear market last month on concern that economic growth may be slowing in China, the biggest industrial fabricator after the U.S., and as Europe remained in recession. Last week, data showed industrial output in China trailed estimates, while Premier Li Keqiang signaled there is limited room for using stimulus to achieve development targets. The metal is used to make solar panels and electronics.

ETP Holdings
Hedge funds and other large speculators held 21,798 so-called short contracts in the week to May 14, increasing them by 20 percent to the most since the week to April 9, data from the U.S. 5/20/2013

Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day - Bloomberg

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Commodity Futures Trading Commission show. Assets in ETPs backed by the metal shrank to 19,299.21 metric tons on May 17, the lowest since January, data compiled by Bloomberg show. Global photovoltaic installations rose at their slowest pace in at least six years in 2012, according to Natixis SA, citing a report by the European Photovoltaic Industry Association. Weak European solar-panel sales will constrain growth in industrial demand for silver, Nic Brown, head of commodities research at Natixis, wrote in a May 16 report. “Silver is a more volatile, less liquid market, with moves in either direction always more exaggerated than gold,” said Xiang Nan, an analyst at CITIC Securities Futures Co., a unit of China’s biggest listed brokerage. “Gold is rapidly losing favor with investors, and this disinterest is showing up in the ETF and CFTC data.”

Leading Indicators
Cash bullion, which has lost 20 percent this year, sank 1.9 percent on May 17 as the Dollar Index (DXY) rose to the highest level since July 2010 and U.S. equities surged to records. U.S. data last week showed consumer sentiment and an index of leading indicators topped estimates, while Federal Reserve Bank of San Francisco President John Williams said the central bank may begin to cut monthly bond purchases from the third quarter. Bullion for June delivery dropped as much as 2.1 percent to $1,336.30 an ounce on the Comex, the lowest for a most-active contract since April 18, and was at $1,344. Futures are also set for an eighth session of losses, the longest declining streak since March 2009. Hedge funds and other large speculators held 74,432 so-called short contracts on May 14, the most since the data began in June 2006, CFTC data show. Holdings in gold-backed ETPs have declined every week since February and assets are down 16 percent this year. Assets in the SPDR Gold Trust, the largest gold-backed ETP, fell to 1,038.41 tons on May 17, the least since March 2009, according to data on the company’s website. Filings last week showed Soros Fund Management LLC and BlackRock Inc. were among funds that cut stakes in the SPDR in the first quarter. Cash platinum lost as much as 1.6 percent to $1,430.75 an ounce, the lowest since April 25, and last traded at $1,449.10, down 5.9 percent this year. Palladium dropped 0.4 percent to $734.20 an ounce, paring gains this year to 4.2 percent. To contact the reporters for this story: Glenys Sim in Singapore at [email protected]; Phoebe Sedgman in Melbourne at [email protected] 5/20/2013

Silver Plunges to Lowest Since 2010 as Gold Drops for Eighth Day - Bloomberg

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To contact the editor responsible for this story: James Poole at [email protected]

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