Silver prices and exchange traded funds could have a volatile year, as investors continue to fly from one safe haven to another. The fate of the euro currency will have a significant influence on the performance of the metal.
“What’s going on in Europe is very worrying,” James Dailey at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said. “The dollar’s strength is working against all commodities, including gold.”
Silver prices are hovering around $30 an ounce after climbing to about $50 last year. This could be a precursor for the volatility that silver could experience in 2012. Silver has fallen as much as 45% from its 31-year high of $49.845 as of April 25, reports Deberati Roy and Maria Kolesnikova on Bloomberg Businessweek.
Sprott Physical Silver Trust (NYSEArca: PSLV) Wednesday said it priced a follow-on offering of 23 million units at a price of $13.20 each. The offering is projected to take about 10 million ounces of silver off the market. [Physical Silver ETF Falls After Offering]
Investors are on the lookout for safe haven assets, especially while the fate of the Eurozone is known. If the euro begins to show weakness, gold and silver prices could rise on demand. If the debt situation can stabilize in the Eurozone, the euro will gain strength and the U.S. dollar will weaken, creating renewed interest in precious metals.
Silver is able to give investors the similar hedging characteristics that gold has but at a much less expensive price. Short-term financial gain is possible with a silver investment, however, due to its industrial applications, the metal is more sensitive to economic highs and lows. [Gold ETFs Battle 50-Day Moving Average]