Silver prices hit 23-year high; gold also rises

NEW YORK — Silver futures climbed Tuesday to levels not seen since 1983 on more strong buying by funds.

Gold also rose sharply, but stayed below Friday’s record of $603.10, its highest level in 25 years.

The most-active May silver contract rose as high as $12.61 an ounce — its best performance since August 1983 — before settling at $12.56, up 49 cents from late Monday.

The June contract for gold, the most-active contract, peaked at $602.80, before easing back $601.80, up $9.10 on the day.

There are a few rationales for the upward trend in precious metals, ranging from fears of inflation to geopolitical tension to a weakening dollar. Gold, which is denominated in the dollar, is viewed as an alternative investment to the U.S. currency.

But many analysts say it’s mostly driven by pure momentum — as more money pours into the commodities, they become increasingly attractive.

Leonard Kaplan, president of Prospector Asset Management, calls commodities the latest bubble.

“It’s the new gold.com, silver.com,” Kaplan said. “The financial history of the markets over the last seven, eight years have been about one bubble after the next … now it’s commodities.”

“It’s all rather silly, but it can last a long time,” Kaplan added.

While no one knows for sure how long the bullish sentiment will last, analysts at Merrill Lynch see a distinct seasonal trend taking effect that could lead to a cool summer for the yellow metal.