I wrote last week about Asia's love for platinum. This week, it's looking like there's a new "hot item" in the East.
Open interest in silver on the Tokyo Commodity Exchange has been on a tear. Since last Friday, outstanding contracts have jumped 20%.
It would be tempting to chalk the rising interest up to general enthusiasm about precious metals. After all, prices for gold, silver and the PGMs have all been rising of late.
But it appears that silver is something special in Japan. At the same time as silver contracts are being bought up, open interest in TOCOM gold has remained relatively flat.
The patterns on the two charts are divergent. Gold open interest in Japan spiked in July and has declined considerably since. Silver, by contrast, has been steadily rising for the last six months.
Of course, silver can be a tricky metal to pin down in terms of source of demand. With both industrial and investment applications, buying can be driven either by commercial users or individuals.
It appears in this case that individual buying is responsible. Most of the rise in open interest the last few weeks has come from "non-commercial customers", suggesting the buyers are individual investors looking for a "store of value" spot to stash their money.
The rise is striking, and certainly helping the silver market. We'll see if it continues.
Here's to "poor man's gold",
By. Dave Forest of Notela Resources