Tuesday, August 14, 2012

Silver: Retail Investors Way Long ETP's; Hedge Funds Not (SLV)

As Mineweb reported May 18:
Dear Silver Bugs: There are a Billion Ounces of Supply Coming on the Market This Year
That's a lot of supply. On that day the Silver ETP was trading at $27.53.
Today, $26.96.

Here's the latest, from Bloomberg:
Silver Hoard Near Record as Hedge-Fund Bulls Recoil: Commodities
At a time when hedge funds are the least bullish on silver in almost four years, investors’ holdings are near a record, siding with the analysts predicting a rally as central banks move to bolster growth.

Speculators cut bets on higher prices by 72 percent since the end of February, mirroring changes in their copper wagers, which turned bearish in May, U.S. Commodity Futures Trading Commission data show. Silver held in exchange-traded products climbed for three months and is now valued at $16.2 billion, according to data compiled by Bloomberg. Prices will average $33.02 an ounce in the fourth quarter, 18 percent more than now, the median of 13 analyst estimates compiled by Bloomberg show.

Hedge funds anticipate slowing growth will curb demand for silver, 53 percent of which is used in products from televisions to batteries. Investors and analysts are bullish on expectations central banks will do more to stimulate economies, expanding consumption and increasing the allure of precious metals as a store of value. Prices tripled as the Federal Reserve bought $2.3 trillion of debt in two rounds of so-called quantitative easing from December 2008 to June 2011. 
“Since the beginning of the year it has reacted more like a base metal than a precious one,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “The main negatives are still in industry. We’re waiting for more quantitative easing, and that would be really positive.”...MORE
Silver does have a place in the portfolio.
From January's "Subculture of Americans prepares for civilization's collapse"

...One last note, if society does break down, silver is more valuable than gold if you have to buy a cwt. of flour or a tank of gas and lead is more valuable than either. With enough lead you can take the gold and silver.