Gold bear market pulls down silver price

In the midst of the gold digging craze in Hong Kong, prices of silver also plummeted to a low level.

By April 18 afternoon, the silver price has plunged through 23 U.S. dollars per ounce to about 22. 5 U.S. dollars. It once touched 22.07 U.S. dollars on Apr. 16 , the lowest since Oct. 2010.

Linus Yip, the chief strategist of First Shanghai Securities Limited in Hong Kong, said silver and gold are of the same asset class. As gold slumps into a bear market, silver inevitably follows suit. But he suggested that extent of decrease in silver price will not be as staggering as that of the gold price.

Yip said different from gold, silver is also demanded for industrial purposes, apart from serving as a store of value. Back in the first half of 2011, the global economy entered murky waters. Industrialists, investors and stakeholders were pessimistic over the future in industry, leading to a drastic fall of the silver price, from about 50 U.S. dollars per ounce to 30 U.S. dollars. The recent drop in silver price is just the continuation of the downward trend since then.

For the time being, Yip said, the silver price has been down to a reasonable level, and he sees no sign of another dramatic fall, but further decline is still possible. Therefore, he advised the investors not to buy in gold or silver at the moment.