China Buyers Drive Silver Prices Higher – by Rhiannon Hoyle (Wall Street Journal – July 4, 2016)

Metal benefits from investors seeking haven assets

SYDNEY—The price of silver surged to a two-year high on Monday as buyers in China made bold bets in the futures market and scooped up vast volumes of physical metal.

Spot silver, the price paid for immediate delivery, rose as much as 6.9% to an intraday peak of $21.132 a troy ounce, its highest value since July 2014, as the Shanghai-traded benchmark futures and physical silver contracts reached their limit.

On the Shanghai Futures Exchange, the most actively traded silver futures contract jumped for a fourth straight session on Monday, hitting its 6% daily maximum at opening to reach 4,419 yuan ($663) a kilogram.

Monday’s moves were buoyed by investors seeking haven assets and speculation about further monetary easing world-wide. The December contract for silver futures has rebounded 23% over the past month following a correction in May. It has gained 31% year-to-date.

“Silver has been chased after by investors as Brexit raised expectations over concerted efforts by global central banks to cut interest rates further,” said Sun Yonggang, an analyst at Shanghai-based Chaos Ternary Futures Co. Lower rates tend to increase the value of precious metals, making them more competitive with yield-bearing assets.

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