Silver Is Wilder Than Gold, Why?
Silver's record-breaking rally is said to have occurred because two major forces converged: exploding physical demand and speculative interest entering a relatively "thin" (liquid) market. That's according to MKS PAMP CEO James Emmett, who sees this development as unusual for the silver market.
According to Emmett, the current demand for silver is "massive," and rarely seen. What makes it even more deceptive is that silver isn't typically a market bustling with speculative investors, but instead, many short-term players are chasing price movements.
Volatile global conditions are fueling the situation. Investors are flocking to bonds and currencies and moving into hard assets like precious metals. But silver is actually rising faster and more volatile than gold, with extreme intraday movements.
One explanation: silver's lower liquidity compared to gold. This means that when speculative funds enter, the price is more easily "dragged" up and down because the market isn't as deep as gold. The effect is visible in sharper-than-usual price swings.
On the physical demand side, retail and wholesale orders still outweigh supply. The wholesale market is also tight as a large amount of metal flows into India, while stock transfers from certain warehouses create temporary space in other locations—still, the supply hasn't disappeared.
The tight market has even affected logistics: some silver (like gold) is even shipped by air, rather than by ship, because market participants feel they don't have time to wait for sea shipments when the market is "chasing" goods.
Key point (5):
- The silver rally is driving large physical demand and the accompanying speculation.
- The silver market is "thinner," so prices are easily manipulated when speculative funds enter.
- The narrative of a trade downturn has caused investors to shift from bonds/currencies to precious metals.
- India has become a major absorption center, further tightening the market.
- The tight supply has led to changes in logistics: some silver is shipped by air. (asd)
Source: Newsmaker.id
