LONDON: Investment money flooding into silver has overwhelmed poor fundamentals and helped it to outperform gold, but the tide could be turning for precious metals and the probability of large losses is rising.

Silver’s price declines in percentage terms is likely to dwarf those seen in gold, which some fund managers say has stronger supply-demand fundamentals.

“History shows that when you get a substantial correction in precious metals, silver falls more than gold,” said Stephen Briggs, an analyst at Société Générale. “It’s a more volatile market and smaller in value terms.”

One big reason behind soaring metals prices has been the tumbling dollar, making commodities priced in dollars less expensive for holders of other currencies. The weak dollar also prompts producers to raise prices to protect profit margins.

Last week the dollar fell to a record low against the euro – with the euro rising beyond $1.60, an event that has caused many investors to question whether the dollar’s declines will continue, or if it has reached a bottom.

Read Full Article from the International Herald

Related posts:

1. Gold Falls Most in Six Weeks as Dollar Rallies; Silver Declines
2. Gold, Silver Rebound as Dollar Drops on Fed’s Discount-Rate Cut
3. Gold Gains in London as Dollar Drops Against Euro; Silver Rises
4. Gold Falls in London After Dollar Rebounds; Silver Also Drops
5. Gold Rises to Highest Since 1980 on Weak Dollar; Silver Gains
6. Gold Falls as Dollar Climbs for Second Day; Silver Declines
7. Liberty Dollar Office Raided by FBI – Gold and Silver “Coins” Seized
8. Gold touches 27-year high of $746.30 an ounce; silver surges nearly 3%
9. WI Republicans drop proposed gold bullion tax break in budget talks
10. Gold, Silver Decline as Dollar’s Slump Against Euro Stalls