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Saturday, Apr. 25, 2015

Dollar dives; Silver explodes

Posted Friday, April 29, 2011, at 3:47 PM

Federal Reserve Chairman Ben Bernanke held an historic first press conference this week, outlining the Fed's plan to continue its policy of maintaining historically low interest rates. Unlike many foreign countries, the United States currently has near-zero interest rates, with short-term rates near 0.25%. These low rates have been cited as a major factor behind the economic recovery, but also have investors worried that inflation could ensue.

The markets reacted to Bernanke's speech by continuing their recent trends. The U.S. Dollar dove to two-year lows as traders chose to place their money in higher-yielding foreign currencies.

As investors are faced with incredibly low interest rates, they have been placing their money in assets that they believe will outperform cash, which pushed the Dow Jones Industrial Average 97 percent higher over the last two and a half years to near 12,800. Even more dramatically, gold has more than doubled to $1546 per ounce, while crude oil has climbed $80 per barrel, or 343 percent, over the same time period.

Outperforming almost every other market, silver has multiplied nearly six fold over the last three years, climbing to $49.82 per ounce this week. High silver prices are enticing more investors to take a look at "poor man's gold", but they are also weighing on industrial users. High silver prices are forcing companies to pass along prices to consumers, raising prices on batteries, film and jewelry.

Corn tracks volatile weather

Wet, cool weather continues to plague corn farmers across the Midwest. With many fields underwater or still too wet to plant, crop watchers fear that planting will fall even further behind schedule. These concerns pushed the new corn crop to all-new highs at $6.84 per bushel on Tuesday.

However, projections for drier weather in the coming week and diminished demand from foreign countries dampened prices, withering corn prices for December delivery back to $6.32 on Thursday night. Around noon Friday, corn popped up 30 cents, approaching its all-time highs again.

In the coming weeks, grain traders and farmers will be tracking the weather closely, watching for warm, dry weather that could allow this year's crop to get planted on time.



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Alex Breitinger
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Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.
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