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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4382)	2/12/2005 1:20:53 AM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Behind the gold rush is a solid silver lining By Kevin Morrison Published: February 11 2005 17:19 \| Last updated: February 11 2005 17:19 Gold may have been the focus of the metal markets this week with debate about whether the International Monetary Fund will sell or revalue its sizeable gold holdings, but silver quietly managed to outshine its fellow precious metal with a sharp move higher this week. Silver often takes a back seat to gold. It is a smaller market, there are no sizeable official holdings by central banks, and demand for the metal has weakened in the past two years as photographic film companies such as Kodak switch to digital and make less film. The metal's fortunes, however, closely track gold. Some traders refer to it as a “poor man's gold” as it costs about 2 per cent of the price of gold. Both metals have benefited in the past three years from the decline in the dollar, but Friday's move in silver prices to its highest level since the metal endured a dramatic slide in December looked odd given that gold remained flat as the dollar steadied. Silver gained 24 cents or 3.5 per cent to $7.17/$7.20 a troy ounce, a gain of about 9 per cent on the week. In comparison, gold gained a little over 1 per cent over the week, ending at near $420 a troy ounce, a level that was seen in the previous week. “Silver is so far off people's radars that it always comes as a bit of a surprise when we see very sharp moves,” said Andy Smith, commodities analyst at Mitsui Global Precious Metals. Unless the gold price starts to rally again, few traders expect silver prices to hold at the higher levels over the coming weeks. Another, quiet achiever in the metals market this week was zinc, reaching its highest level since October 1997 when it touched $1,340 a tonne on the London Metal Exchange. The metal has risen more than 40 per cent since September and has become the favoured metal in the base metals market. The outlook for zinc has changed as China has moved from being a net exporter of metals to a net importer for the first time since 1989. China consumed 10 per cent more zinc last year, which in turn increased global demand by 5.5 per cent to 7.5m tonnes, or about 250,000 tonnes more than supplies, according to the International Lead Zinc Study Group. Chinese demand for zinc is driven by its auto, appliance-making and construction sectors where it is used as a anti-corrosive coating on metals. Zinc was also helped this week by supply concerns when Nippon Mining of Japan announced it would close production of its 45,000 tonnes a year zinc mine. news.ft.com