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The article explores the falling of prices on silver in the current global economic scenario during August and September 2011. The fiscal crisis in Europe has affected global markets in the year 2011. This was prominently displayed in the precious metals market. Initially, prices for these metals rose high as investor’s sentiment was that they provided a safe haven against the weak global economy. Stocks worldwide have plunged downwards, commodity prices have fallen as panic among investors of a recession looms over the horizon. Investors are turning to US dollar and treasuries, to park their money as the panic level escalates. This sentiment caused prices on silver as well as gold to fall sharply. Silver prices have been doubly hit than gold, as it plays a dual role. Silver price suffered due to decline in precious metal status as well as low demand in industrial applications due to a crawling global economy. Advocates of gold and silver investments are displeased with the trend. It seems illogical to invest in US dollar, which is already weakened by the fragile US economy, shattered housing industry, tottering automotive industry and banks up to their ears in debt. The logic behind this trend is that the Euro zone debt woes are expected to boost the strength of the US dollar. Whether this sentiment, can become a reality will be only ascertained with time. Admirers of gold and silver staunchly oppose the sentiment while questioning the validity of investing in an economy which has gone haywire. Investment strategists urge investors to re-examine and re-assess the situation before making any blind decisions compelled by the market trend. Does it make some to invest in a tottering and collapsing economy? Is it believable that such an economy is strengthening the US dollar? These are the questions raised by the analysts to pinpoint the futility of investing in US treasuries. In spite of the weak global economy, precious metals have steadily done well in the global market. The reason for this was the sentiment that it provided a hedge against the soaring inflation. Another reason was that India and China remained a huge market for precious metals. The giant share of this demand was created by the middle class in these countries. However, the belief that the demand from this market would be maintained for years to come was shattered. The purchasing power of this middle class was largely crippled due to high inflation which in turn disabled them from making investments in precious metals. Whether the precious metals can rise above the US dollar or the US dollar gives out under the burden of excessive government spending, yet remains to be seen. The writer is a knowledgeable journalist in silver market, mining & stocks, who periodically writes articles related to silver prices, silver spot price including tips on investment in silver. Please visit silverprices.com for more details.
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