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Silver Futures Plunge on Lack of Inflation

October 14, 1993

Undated (AP) _ Silver futures prices fell sharply Thursday as low inflation and slow economic growth killed investors’ appetite for precious metals.

Gold prices also retreated in futures trading on New York’s Commodity Exchange. On other commodity markets, oil futures fell, while livestock and meat futures were mixed, as were grains and soybeans.

Silver for December delivery fell 8.5 cents to $4.348 a troy ounce; October gold sank 90 cents to $365.30 a troy ounce.

Silver had risen by 38 cents, or about 9 percent, since Oct. 1 on speculative buying, But Thursday’s economic data gave investors little incentive to hold precious metals.

Wholesale prices edged up just 0.2 percent in September, while both retail sales and new unemployment claims rose. The numbers suggested the U.S. economy is continuing to grow slowly, with almost no inflation.

Investment demand for precious metals typically rises with inflation. Silver also is sensitive to economic growth since it is used mainly as an industrial metal.

″Ninety percent of silver is consumed in the industrial nations of North America, Europe and Japan, and if you look around, none of those is doing especially well. None is showing the kind of robust economic growth you need to support silver,″ said George Milling-Stanley of Lehman Brothers Inc. in New York.

He predicted silver would drop, possibly to $4 an ounce, a price at which the metal last traded on Sept. 14.

But Ted Ryan, director of futures research for Chicago Corp., a trading company, said he expects silver and gold to rally late in the fourth quarter and into 1994 as demand picks up from overseas.

Live cattle futures rose sharply on the Chicago Mercantile Exchange on higher cash prices and perceptions that the market has established a seasonal bottom and will move higher.

Live cattle for October delivery rose .97 cent to 72.07 cents a pound; October feeder cattle rose .25 cent to 84.50 cents a pound; October live hogs fell .65 cent to 48.97 cents a pound; February frozen pork bellies fell .15 cent to 57.72 cents a pound.

Light sweet crude oil for November delivery fell 14 cents on the New York Mercantile Exchange to $18.50 a barrel; November heating oil fell .15 cent to 55.52 cents a gallon; November unleaded gasoline rose .34 cent to 52.92 cents a gallon; November natural gas fell 3.8 cents to $2.167 per 1,000 cubic feet.

Soybean futures prices rose modestly in quiet trading on the Chicago Board of Trade as investment funds changed from sellers to buyers. Wheat, corn and oat futures slipped amid perceptions of dimmer prospects for export sales of U.S. grain.

Wheat for December delivery slipped 3/4 cent to $3.24 1/4 a bushel; December corn fell 1/4 cent to $2.49 a bushel; December oats dropped 1 cents to $1.41 1/2 a bushel; November soybeans rose 3 cents to $6.15 a bushel.

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