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June launch planned for silver futures

Silver has been a lucrative investment option as its price has risen by 70% since January of last year, while analysts expect the rise to continue as the US dollar depreciates.

Boonlert Siripanich, president and CEO of the gold and silver broker Ausiris Co Ltd, which operates on the Thailand Futures Exchange (TFEX), said the price of silver rose from US$28 per ounce in January 2010 to $30 per ounce at the end of last year. It now stands at $48 per ounce.

Silver prices have risen correspondingly with gold, partially because of speculative trading by hedge funds due to the weakening dollar. Demand for silver for industrial purposes has also increased, particularly in nanotechnology, IT and the medical sector.

”Demand for silver in the industrial sector is expected to increase around 50-80% within the next five years,” Mr Boonlert said.

Prices of gold and silver are likely to increase in the near future as the US central bank has decided to keep its low interest rate, which may cause further depreciation of the US currency.

Mr Boonlert expects the prices of gold and silver will continue to rise until the third quarter of this year. He predicts gold will reach $1,600 per ounce and silver $50.75, the highest in the past 31 years.

If the US economy continues to recover in the second half, the dollar could appreciate, hurting precious metals.

Kritchrat Hirunyasiri, managing director of MTS Gold Group, said the market size for silver last year was 200-250 tonnes. He recommended investors be cautious as silver is more volatile than gold, making it suitable for speculation.

Boonkit Jitngamplang, president of Benson Jewelry, said silver prices had been rising since the Lehman Brothers collapse in 2008.

In the past, the price ratio between gold and silver stood at 80:1. In 2009, the ratio was 60:1, and it is 32:1 at present.

Kesara Manchusree, the TFEX managing director, said the exchange would begin silver futures trading on June 20 while extending trading hours for both gold and silver futures until 10.30 pm, from 4.30 pm now, to respond to demand for trading hours that more closely match the US market.

The contract size of silver futures is 100 ounces (or approximately 3.1 kg), or around 90,000 baht (or approximately $3,000). Silver will be quoted in Thai baht per ounce, and its underlying price will be based on 99.9% pure silver.

Final settlement will be in cash when the contract expires, instead of physical delivery. Final settlement prices for silver will be based on the same source as when gold futures are settled: the London Bullion Market Association.

”TFEX will continue our training programme for the next three months to educate investors,” Mrs Kesara said

Source: Bangkok Post

 

ThaiVest Editorial Team