Silver prices climbed to an eleven-week high when they gained $0.52 to reach the price of $40.91 per ounce. The debt-ceiling impasse in America has caused investors to turn to silver and gold for a safety net against the U.S Dollar.
Silver Investing News respectively interviewed Michael DiRienzo and Jason Goulden, Executive Director at the Silver Institute and Vice President of Research at Metals Economics Group. Both these gentlemen were asked to give their input regarding the factors that are involved in the silver market at this time.
It is believed that economic uncertainly motivates investing in hard assets rather than fiat money. The challenge is that a resolution is necessary by August 2nd on the issue of the debt ceiling. Decision makers look unlikely to be able to make a decision on this matter. That said, it is believed by experts that the vote will be to raise the ceiling on the debt. Irrespective of any maneuvering on behalf of the legislators, the pricing of silver is an issue in the newspapers.
Mr DiRienzo discussed his feelings on the increasing trend of investors to invest in solid assets. He feels that investors who invest in silver are considering numerous factors. Two of these factors include the economy and politics in the rest of the world and the current weakness of the dollar. Due to these two factors, many people are investing into assets such as silver and gold. Investors feel much safer investing wealth in hard assets.
It is envisaged that the lawmakers will probably resolve the debt ceiling matter on time. Should the debt ceiling not be raised, Americans face dire consequences with regards to the economy in that country. In all probability, any resolution will result in an adjustment to the price of silver.
Mr. Goulden expressed that it would be wise to correct all commodities should the ceiling issue be resolved satisfactorily. For now, it is wise for people to remain guarded about the matter. Thankfully, memories are short lived and investment trends tend to correct themselves quickly after such occurrences. This means that there should only be a temporary dip in prices.
In the long term, investors fear inflation will cause an increased demand for silver coins and ETFs. It is anticipated that this trend will continue long after the lawmakers in America have come to a decision. The price of silver and gold will be largely affected by anxiety regarding the fourteen trillion dollar debt and poor monetary policy.
Across the globe, it is difficult to keep coins on the shelf and in America the American Eagle coins are gone before the mints receive the next shipment. DiRienzo suggests that demand for silver is growing fast as a result of growth on the industrial side and the investment demand.
Asian investors have access to silver due to the fact that the Hong Kong Mercantile Exchange is trading silver futures. Silver will become quite bullish due to this in the long term. Another reason for this is that Chinese demand for silver increased by 67 percent in 2010.