* Silver hits record high near $50 first time since 1980
* Spot gold hits record for a second day as dollar drops
* Inflation, economic uncertainty cited after Bernanke
* Coming up: U.S. personal income on Friday
(Recasts, adds comments, updates market activity)
By Frank Tang
NEW YORK, April 28 (Reuters) - Silver soared to an all-time
high on Thursday and gold rose to another record, as the dollar
fell and as signs that the Federal Reserve would maintain a
loose monetary policy stoke inflation worries.
Silver briefly climbed to within a whisker of $50 an ounce,
eclipsing the peak hit when Texan brothers William Herbert and
Nelson Bunker Hunt sought to corner the silver market three
decades ago. The metal later pulled back on technical selling.
Option traders reported strong buying of long-dated
in-the-money silver calls, indicating bullish investor
expectations. Also, the value of gold in terms of silver fell
to less than 32 ounces on Thursday, the lowest on record
according to Reuters data dating back to 1982.
"We saw this morning weakness in the U.S. GDP numbers and a
rise in the inflation data in primarily food and gasoline
prices. This led to the weakness in the dollar which caused
investors to turn to silver and gold as a hedge against
inflation," said Herb Kurlan, president of VTrader Pro, a
proprietary trading firm.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Take a Look on rise of gold, silver []
Graphic of silver best-performing commodity:
http://r.reuters.com/duj88r
FACTBOX-Gold milestones to record high []
Special PDF report on gold, silver rally:
http://link.reuters.com/xuk29r
India silver recycling to curb imports []
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Spot silver <XAG=>, which has rocketed nearly 60 percent so
far this year, rose 1.6 percent to $48.53 an ounce by 3:29 p.m.
EDT (1929 GMT), having earlier hit a record $49.51 an ounce,
surpassing a peak of $49.48 on Jan. 18, 1980 set during the
Hunt brothers era.
A U.S. jury found that the Hunt brothers conspired to
manipulate the prices of silver in 1979-80. During that time
the price of U.S. silver futures soared from below $11 an ounce
to a record $50.35, then tumbled back to around $11.
U.S. GROWTH SLOWS, INFLATION RISES
Spot gold <XAU=> rose to a lifetime high of $1,538.35 an
ounce, breaking records for the ninth time in 10 sessions. It
was later up 0.6 percent at $1,535.60 an ounce, up 0.6 percent.
U.S. June gold futures <GCM1> settled up 0.9 percent at
$1,531.20.
Precious metals rose after as data showed U.S. economic
growth braked sharply in the first quarter as higher food and
gasoline prices dampened consumer spending, sending inflation
rising at its fastest pace in 2-1/2 years. []
Adjusted for inflation, however, the current price of
silver is about two-thirds below its record at over $130 an
ounce, while gold was only a third below a peak of $2,200. Both
records were set in 1980.
Silver has surged 11 percent in just the last two days,
even after Monday's technical failure that almost sent prices
toward $50 before pulling back sharply.
Year to date, silver was up almost 60 percent, currently
the best performing commodity, sharply above gold's 8 percent
gain.
SILVER OPTIONS SEEN BULLISH
On the silver options front, heavy buying of call options
indicated investors continued to bet silver prices to rise
further.
"I am seeing all types of bullish call buying. They are in
the money and far out, including December, March and September
calls," said COMEX options floor trader Dominick Cognata. "They
are looking to buy cheap call spreads because this thing looks
like it may shoot up to to $70 or $80."
Gold and silver's rally was supported by follow-up buying
after Federal Reserve Chairman Ben Bernanke signaled on
Wednesday that the U.S. central bank is in no rush to scale
back its support for the economy. []
"Yesterday's speech from the Fed was an acknowledgment of
the continuing of the strategy by the Fed and Washington ... to
monetize our debt, and basically to devalue the dollar," said
Robert Lutts, chief investment officer of Cabot Money
Management, which oversees more than $500 million in client
assets.
"The metal markets are recognizing that and it is being
priced in. What monetization means is that, down the road, we
will have more inflation," he said.
In platinum group metals, platinum <XPT=> gained 0.8
percent to $1,834.40 an ounce, while palladium <XPD=> rose 1.3
percent to $773 an ounce.
Prices at 3:27 p.m. EDT (1927 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCM1> 1531.20 14.10 0.9% 7.7%
US silver <SIK1> 47.520 1.562 0.0% 53.6%
US platinum <PLN1> 1839.90 20.70 1.1% 3.5%
US palladium <PAM1> 775.30 17.20 2.3% -3.5%
Gold <XAU=> 1535.60 9.20 0.6% 8.2%
Silver <XAG=> 48.53 0.77 1.6% 57.3%
Platinum <XPT=> 1834.40 14.95 0.8% 3.8%
Palladium <XPD=> 773.00 9.55 1.3% -3.3%
Gold Fix <XAUFIX=> 1535.50 4.50 0.3% 8.9%
Silver Fix <XAGFIX=> 48.70 340.00 7.5% 59.0%
Platinum Fix <XPTFIX=> 1835.00 15.00 0.8% 6.0%
Palladium Fix <XPDFIX=> 777.00 8.00 1.0% -1.8%
(Additional reporting by Christopher Kelly in New York,
Rebekah Curtis and Amanda Cooper in London and Lewa Pardomuanin
Singapore; Editing by Marguerita Choy)
