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Wednesday, September 1, 2010

Silver Booming Whichever Way Economy Turns

'Silver, the precious metal most used in industry, is attracting investors betting on both faster and slower economic growth as prices extend the longest run of quarterly gains in three decades.

Doubling as a store of value for buyers concerned about the economy and as an industrial material for those bullish on growth, silver is outperforming metals from copper to zinc this year and keeping pace with gold. It will rise as much as 15 percent to $22 an ounce before December, from $19.145 today, according to Daniel Brebner, an analyst at Deutsche Bank AG whose fourth-quarter outlook was accurate to within 0.7 percent.

While the Federal Reserve warned last week that financial conditions are “less supportive” of growth, investors held a record amount of silver in exchange-traded products backed by the metal, Barclays Capital data show. Options giving traders the right to buy the metal at $25 before Nov. 23 are the most widely held on the Comex in New York.

“Silver is really attractive because you have strong investment demand and strong fabrication demand,” said Jeffrey M. Christian, the managing director of CPM Group, a research company in New York. Silver rose 68 percent since he recommended buying the metal in a Bloomberg interview in October 2008. “You buy gold when you think the world is going to hell in a handbasket. You buy copper when the economy is booming. In between those two, if you’re a bit confused, you buy silver.”'

W. E. Messamore,
Editor in Chief, THL
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