Silver is a new gold
For investors who have missed 46 percent increase in prices for silver this year, not late to join it, the firm owning the most profitable in the world index fund considers. The basic reason attracting investors to investments in precious metals this year — low key interest rates — anywhere will not get to in foreseeable prospect, the head of PureFunds Andrew Chanin says.
The exchange investment fund managed by PureFunds specializing in shares of the companies extracting silver has made for investors 272 percent profit this year. In the 2016th silver rises in price quicker than the majority of primary goods while profitability of the debt instruments for the total amount of 8 trillion dollars which are switched on in a global index of government bonds of developed countries of Bloomberg has fallen below zero.
It means that the one who buys these bonds and holds them before settlement loses money. Chanin speaks: "It really changes a landscape. If you have a negative yield on a sovereign debt, zero profitability suddenly begins to look more attractive. And it forces more and more people to be interested in investments into precious metals".
The Central Banks reduce rates worldwide, begin mass buying up of assets or resort to both tools directly, reducing bond yield from Japan to Great Britain to historical minima. Case not only in the dokhodnostyakh. Silver rises in price quicker than gold thanks to the existing forecasts about decrease in production of silver for the first time since 2011 while physical demand for metal grows the fourth year in a row.
According to the estimates of CPM Group research company, production of silver in 2016 will decrease by 2,4% to 784,8 million ounces while the industrial demand including jewelry, production of electronics and solar panels will grow by 1,6% to 889,7 million ounces. Supply of the processed metal, including scrap and the melted coins, will decrease by 1% to 203 million ounces. Prices of silver — as a production by-product in mines where extract zinc (LME: ZINK), lead, copper and gold — after three years of decrease as a result of which the price of metal has fallen more than to a half.
Rally of 2016 can will continue, consider in the largest mining company Fresnillo Plc (LON: FRES), whose profit for the first half of the year has grown more than twice. Recovery of prices of silver stirs interest in mining companies that has allowed the mentioned PureFunds fund to reach the maximum profit among 6000 exchange investment funds traced by Bloomberg. The largest object of investments of fund, owning gold and silver mines Coeur Mining Inc., I have risen in price more, than six times.
After losses in the I quarter the adjusted earnings of Coeur Mining in the II quarter thanks to cost reduction have reached 11 cents on the share, having exceeded the appreciation of analysts. Todd Rozenblyut the director of research of exchange funds in S&P Global Market Intelligence speaks: "We see that investors look for alternatives to traditional products — to shares and bonds. Increase of operating efficiency extracting the companies and improvement of balances has helped them to become more profitable now when the prices were recovered".