BLBG: Silver Reaches 30-Year High as Gold Ratio Slumps, Fed Signals Bond Buying
Silver gained to the highest level since 1980 as the gold ratio dropped to the lowest in more than three years, bolstering demand for the metal among investors who seek to protect their wealth. Gold gained.
One ounce of gold bought as little as 47.386 ounces of silver as of 2:08 p.m. Singapore time, the lowest level since February 2007, according to Bloomberg News calculations. Gold and precious metals also gained after Federal Reserve Chairman Ben S. Bernanke said the central bank may buy more bonds to further boost the economy.
“There is some substitution impact on silver as investors also see the metal as a store of value, just like gold,” Ben Westmore, an analyst at National Australia Bank Ltd., said today by phone from Melbourne.
Silver for immediate delivery advanced as much as 1.7 percent to $29.915 an ounce, the highest price since March 1980, and traded at $29.7663 by 3:31 p.m. Singapore time. The metal has advanced 77 percent this year, outperforming gold’s 29 percent gain.
Speculative long positions, or bets prices will rise, outnumbered shorts by 34,034 contracts on Comex futures as of Nov. 30, a 12 percent jump from the previous week. Silver holdings by exchange-traded funds increased 0.1 percent from the previous day to 477.9 million ounces as of Dec. 3.
ETF Securities Ltd. started an exchange-traded fund backed by silver, platinum and palladium, known as ETFS Physical White Metals Basket Shares on the NYSE Arca on Dec. 3. The fund is weighted with 55 percent in silver, 33 percent in platinum and 12 percent in palladium, according to the company.
Gold Climbs
Gold for immediate delivery climbed 0.3 percent to $1,418.51 an ounce at 3:35 p.m. Singapore time. Spot gold rose 3.7 percent last week, the second straight weekly gain. The February-delivery contract climbed as much as 0.8 percent to $1,418 an ounce on the Comex in New York.
In an interview broadcast yesterday by CBS Corp.’s “60 Minutes” program, Bernanke said the U.S. economy is barely expanding at a sustainable pace and that it’s possible the Fed may expand bond purchases beyond the $600 billion announced last month to spur growth.
“That means there will be more liquidity in the markets,” said Park Jong Beom, a trader at Tong Yang Futures Trading Co. in Seoul, referring to Bernanke’s comments. “The dollar is poised to weaken further, boosting gold.”
The dollar was little changed against a basket of six major currencies. The Dollar Index dropped by the most in six weeks Dec. 3 after a U.S. government report showed employers added fewer jobs than forecast in November and the unemployment rate rose to 9.8 percent. Bullion typically moves inversely to the U.S. currency. Gold reached a record $1,424.60 on Nov. 9.
Hedge-fund managers and other large speculators increased their net-long position in New York gold futures by 3 percent to 227,607 contracts in the week ended Nov. 30 from the previous week, according to U.S. Commodity Futures Trading Commission data.
Palladium climbed 0.5 percent to $772.50 an ounce and platinum increased 0.5 percent to $1,736 an ounce.
To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.
To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net
