Hedge funds are going wild for silver - Blanchard and ... - Gold

Holdings are expanding to record levels on bets it will outperform gold

Hedge funds are the most bullish on silver in seven months and investors' holdings are expanding toward a record on speculation the metal will outperform gold as central banks seek to boost growth.

Wagers on rising prices jumped 10-fold since June, U.S. Commodity Futures Trading Commission data show. ...

If history is any guide, silver will beat gold after the Federal Reserve announced a third round of debt-buying and central banks from Europe to Japan pledged more action. Silver rose about 53 percent in the Fed's first quantitative easing from December 2008 through March 2010, twice as much as gold, and 24 percent during the second phase ending in June 2011, three times as much. Silver will probably keep beating gold in the next several quarters, Morgan Stanley predicts.

"The recent announcements on the part of central banks really sparked the rally," said Peter Sorrentino, who helps manage $14.6 billion of assets at Huntington Asset Advisors in Cincinnati. "Silver has now become a two-way play, getting bids both on industrial demand as well as a monetary hedge."?

In a separate interview on Yahoo! Finance's "Breakout" show, ETF Trends editor Tom Lydon also sounded bullish on silver:

"There's been a huge increase in emerging market demand as more people move up to the middle class, and silver is an easier acquisition for them," Lydon says in the attached video. "Although somewhat of a speculative investment ten years ago, gold and silver are now becoming a foundation investment." ...

While silver is unarguably more volatile, Lydon points out that it is still almost 40% below its highs of two years ago, while gold is just 15% beneath its $2,000 peak a year ago.

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Source: http://www.blanchardonline.com/investing-news-blog/econ.php?article=4921

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