Silver the Best Performing Commodity over the Past Decade, Research Shows

on Sep 19, 2012
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Although silver is generally considered to be a volatile commodity, recent Lloyds (LON:LLOY, NYSE:LYG) research indicated that the precious metal has been the best performing commodity over the past decade, the mining news website Mineweb reported on 18 September 2012. The research of Lloyds TSB Private Banking Commodities Monitor also showed that precious metals in general have been the best performing sector in the past ten years.

According to the Lloyds TBS research, silver prices have climbed by the impressive 572 percent between 2002 and 2012, significantly greater than any of the other commodities tracked. As noted in the Lloyds press release, the rise in silver prices is attributed to the safe haven appeal of silver and on the high demand for industrial uses.
And while silver was the commodities champion, the other precious metals also scored high. Mineweb reports that gold was the runner-up in the price increase race, following silver with 428 percent. According to the Lloyds Commodity Monitor, it is the demand for gold from developing countries and investors looking to safeguard their investments by using it as a hedge that have helped sustain the price of gold at a high level.

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!m[](/uploads/story/420/thumbs/pic1_inline.png)Tin and copper also performed well, increasing by 414 and 406 percent, respectively, whereas platinum went up by 170 percent. Lloyds TSB Private Banking notes that the precious metals sector as a whole has risen by 358 percent since 2002, outperforming all the other tracked sectors, such as base metals, energy and agriculture. “Precious metals were the best performing commodity, with their perceived position as a safe haven investment reinforced over recent years amid the financial market turmoil”, comments Ashish Misra, head of investments at Lloyds TSB Private Banking.

Yet, despite the impressive decade of performance, the research also showed that precious metal prices, including silver, have experienced significant falls over the past year. While commodity prices have declined by 13 percent over the past year, at a sector level, precious as well as base metals have experienced the biggest falls, both dropping by 19 percent. The energy sector was the only one to record an increase, rising by three percent. Mineweb reports that silver in particular dropped by 25 percent from August 2011 to August 2012, whereas gold and platinum declined by 10 and 17 percent, respectively.

“Commodity prices have risen significantly over the past decade, partly reflecting strong demand from emerging markets over the period,” points out Mr Misra, adding that the continued global economic uncertainty has contributed to the weakening of commodity prices over the past year. “Looking forward, commodity prices are likely to be driven by the level of demand from emerging economies such as China and India.”

As is the case with gold, silver price also received a significant boost with the US Federal Reserve announcing a third round of quantitative easing. As reported by Bloomberg on September 13, following the Fed announcement, silver price jumped to $34.87, the highest since March 5. According to Mineweb, analysts have started revising their predictions of year-end silver, suggesting that silver price could approach $40 again.

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