Silver Drops to Lowest Since 2010

Silver for July delivery plunged 2.1% on Friday and settled at $22.19 a troy ounce for the week, reaching its lowest price since October 5, 2010. Silver for immediate delivery dropped 7% to $20.6985 a troy ounce and its ration to gold rose to 64,89, although gold prices have kept following a bearish trend for an eight session, having its worst run since March 2009. Silver is the worst performing precious metal in 2013, followed closely by gold, and lost 30% of its value in 2013. It follows concerns of lowering demand due to slowing economic growth in China and Europe still not being able to step out of the recession. While news came out about some of the worlds top investors shorting their holdings in gold-backed ETPs, the same sentiment has hit the silver. Silver held in ETPs dropped to a four-month low on May 17, following the bets on lower prices by hedge funds and other large speculators.

Yang Xuejie, an analyst at Galaxy Futures Co., said “Silver is trekking a similar path to gold. Investment demand is slowly falling and there are doubts about industrial demand, which is the primary driver.”

Silver demand has contracted also due to the drop in global photovoltaic installations, which reached a six-year low in 2012 according to the European Photovoltaic Association amid weak solar-panel sales in Europe. Xiang Nan, an analyst at CITIC Securities Futures Co. said: “Silver is a more volatile, less liquid market, with moves in either direction always more exaggerated than gold.Gold is rapidly losing favor with investors, and this disinterest is showing up in the ETF and CFTC data.”