(For more on the gold bear market, see EXT5.)
Aug. 15 (Bloomberg) -- Silver futures rose to the highest since May, entering a bull market, as equities slumped and the dollar declined, increasing demand for the precious metal as an alternative investment.
The MSCI All-Country World Index of shares headed for the biggest drop in seven weeks. The Bloomberg Dollar Index, a gauge against 10 major currencies, fell as much as 0.5 percent, declining for the second straight day. Gold rose to an eight- week high. Holdings in exchange-traded funds backed by silver rose to a record 19,890 metric tons yesterday and are up 5.1 percent this year.
“We are seeing money flow into precious metals from stocks today,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The weakness in the dollar is also a big support.”
Silver futures for September delivery advanced 5.3 percent to settle at $22.935 an ounce at 1:49 p.m. on the Comex in New York, the biggest jump since July 22. Earlier, prices rose to $23.19, the highest since May 22. Trading was 72 percent higher than the average in the past 100 days, data compiled by Bloomberg show.
Prices have jumped 24 percent from a 34-month closing low on June 27 as the dollar heads for a second straight monthly drop and physical demand surges. Sales of American Eagle silver coins by the U.S. Mint were 31 million ounces so far this year, compared with 33.7 million ounces sold in all of 2012, data on the website showed.
The U.S. Mint had suspended sales of silver coins for more than a week because of a lack of inventory in January.
“Physical demand has been very strong,” McGhee said.
--Editors: Millie Munshi, Steve Stroth