Silver is up over 44% in the last nine months. But thanks to a new campaign by the Chinese government, silver is about to take off higher. Much higher. Here's how to play silver for a "triple" this year...
Once upon a time, the Chinese government forbade ownership of all precious metals.
But now, the ban has been lifted. In fact, China Central Television is running a campaign encouraging the population to invest in silver.
That means a billion potential new silver investors hitting the market. This is especially significant when you consider the average savings rate in China is 30 to 40%.
But the flood of new Chinese silver investors isn't the only factor driving up silver prices. The increased use of silver in everything from solar cell technology to medicine is pushing up prices as well.PRECIOUS METALS: Gold Steady, Silver Jumps To 30-Year High
- DECEMBER 6, 2010, 1:45 A.M. ET
Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)--Gold suffered mild profit-taking in Asia Monday after breaking the $1,400-a-troy-ounce level Friday, but silver appears set for a near-term test of $30 after comments from U.S. Federal Reserve Chairman Ben Bernanke poured fuel on the metal's speculative fire.
Bernanke told the CBS's 60 Minutes news program that "it's certainly possible" the central bank could expand a program to buy $600 billion in Treasury securities beyond the initial target it announced early last month.
"Technically there's no reason why we should stop at $30," a Singapore-based metals trader said. "Silver is a liquidity play and Bernanke's comments show the liquidity tap is going to stay on."
At 0625 GMT, spot gold was at $1,415.50/oz, up $1 from Friday's New York close, while spot silver was at a new 30-year high of $29.84/oz, up 46 cents.
On the Tokyo Commodities Exchange, October 2011 gold was at Y3,776 a gram, up Y28.
With the euro-zone debt crisis still in play, gold appears to be supported on all fronts, especially with demand in Asia increasing, despite a 29% year-to-date increase in the spot price.
Dow Jones Newswires reported Friday that India's gold imports this year are likely to be 700 metric tons, about 46% more than last year, as higher farm output and product prices encourage farmers to invest in the yellow metal, boosting local consumption.
Standard Bank said in a report that China's demand for gold is likely to total 600 tons this year from less than 500 tons last year, with around 250 tons having to be imported.
"We believe the rise in gold demand is mainly on the back of increased jewellery and investment demand," it said, adding that industrial demand remains small.
Platinum group metals were also making gains, with spot platinum at $1,729/oz, up $4, and palladium at $773/oz, up $6 and just off Friday's nine-year high of $776.
-By James Campbell, Dow Jones Newswires; 65-64154-082; email@example.com