Hedge Funds Bullish on Silver in Wake of QE III

September 27, 2012 James Heinsman Hedge Fund News

Silver’s Price Increasing Faster Than Gold as Hedge Fund Managers are Bullish on the popular commodity

As central banks are looking to expand their growth hedge funds are buying up silver in the best buying spree seen for the commodity in seven months. Investors are seeing their silver holdings reaching to record levels as speculation continues on the commodities markets, with silver’s performance expected to even outperform gold.

Bets on the rising prices of silver have increased by a factor or ten since last June, according to data released by the U.S. Commodity Futures Trading Commission. Investors bought 717.2 metric tons of silver, valued at $784 million. Prices are most likely going to continue skyward over the next three quarters, averaging $38 per ounce.

If we can learn from history, silver will out-perform gold as soon as the Federal Reserve will announced its third application of debt-buying, also known as qualitative easing. Central banks in Europe and Japan also promised more involvement. Silver went up about 53 percent after the Feds QE I from December 2008 until March 2010, double gold’s performance. QE II, which ended in June 2011 saw silver rise by 24 percent, three times gold’s upward climb. Therefore it is expected that silver will be a good bet for investors, and especially hedge fund managers, during the Feds more for QE 3.

Commodities, Federal Reserve, Gold, Hedge Funds, QE III,

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