“Hang Seng Financial”: Many investors are supplementing their gold holdings by turning to silver.

Hang Seng Financial, the Asia-based investment house, has reportedly restated its confidence in silver as an alternative to gold for clients looking to gain further exposure to precious metals.

As part of their monthly email to clients, analysts at Hang Seng Financial suggested that fundamental supply and demand dynamics coupled with the monetization of debt by governments were just two of the factors supporting the case for investment in what is seen as gold’s sister precious metal.

Although much of the spotlight has been on gold’s impressive 40% price gain in 2009, silver has become the contrarian investor’s cause de célèbre with many commentators citing the metal’s industrial uses and its perception as a currency in many parts of the world.

Hang Seng Financial analysts believe that the price of silver is likely to increase as the metal’s use in a number of new technologies continues to grow. Silver is used in RFID (Radio Frequency Identification), an electronic tag which is used extensively by retailers, logistics firms and airport baggage handlers to identify the location and identity of goods or merchandise.

Hang Seng Financial believe that exposure to silver – through the physical commodity, ETFs, and/or silver mining companies – will likely be a “very attractive investment“ over the next several years.

Hang Seng Financial: The V-shaped recovery is – and always has been – an illusion.

Hang Seng Financial: HONG KONG – In a monthly market report to clients, “Hang Seng Financial” analysts have apparently suggested that investors are slowly but surely coming to terms with the fact that a sustainable and strong economic recovery is unlikely.

A stream of disappointing economic data, combined with overwhelming evidence that it is cost-cuts that are fueling company profits rather than increasing revenues, is changing sentiment among investors who heeded mainstream commentary suggesting developed economies could rebound quickly from their recessions.

Delinquencies among prime mortgage borrowers in the US have surpassed those of subprime borrowers for the first time ever and almost 10% of all mortgages in the US are now delinquent adding downward pressure on real estate values that have been in decline for over 3 years.

Hopes that China would lead the world out of the slowdown were recently dashed after the People’s Bank of China said it was tightening credit to discourage investment in asset bubbles.

The firm maintains its view that, with consumers in the West hamstrung by debt, it is unwise to count on their making any meaningful contribution to their respective GDP figures in the months going forward.

The general consensus among “Hang Seng Financial” analysts is that the recovery will be W-shaped and laborious.

“Hang Seng Financial”: Who will buy the MBS on the Fed’s balance sheet?

The toxic assets held on the US Federal Reserve’s balance sheet will be very difficult to sell when the central bank decides to withdraw liquidity from the financial system as part of its exit strategy.

That’s the view from analysts at “Hang Seng Financial”, the Asia-based boutique investment house. They pointed to the market for MBS (mortgage-backed securities) as being seriously impaired and suggested that the Fed may have to accommodate the assets for years to come or until the US real estate market stages a sustained recovery.

The assets were purchased by the Fed as part of its effort to increase the amount of credit in the mortgage market while keeping mortgage rates artificially low in a bid to stimulate a housing market that has been in decline for more than 3 years.

“Hang Seng Financial” believe that, because unemployment in the US is still officially at 10%, there are many more delinquencies and foreclosures to come before the end of the crisis which makes the assets unattractive to investors as many of the properties upon which mortgages have been secured are worth less than they were at the time they were bought.

The general consensus among commentators appears to be that the Fed is in or close to being in a position to begin tightening measures but “Hang Seng Financial” advised caution among clients citing the fact that the Fed would be unlikely to begin tightening while Americans were still losing their jobs.

“Hang Seng Financial”: The price of gold is likely to be underpinned by interest from central banks in developing nations.

Financial News, HONG KONG – Sources close to “Hang Seng Financial” say that the firm remains confident in the integrity of the long term secular bull market in gold thanks to continuing and ever-present interest from central banks in developing economies.

One of the sources pointed to the November 2009 purchase of 200 tonnes of IMF gold and to the steady accumulation by the People’s Bank of China as evidence of support for the price in the years going forward.

“Hang Seng Financial” analysts are thought to believe that the trend will continue as governments in developed nations continue to resort to the printing press to stimulate their moribund economies. China has, on several occasions, said that it remains concerned at the effect of the US Federal Reserve’s quantitative easing program on the value of its dollar-denominated holdings.

China holds nearly $700 billion of US Treasury bonds and mortgage agency debt issued by Freddie Mac and Fannie Mae is widely known to be seeking to diversify the content of it foreign currency holdings away from the US dollar.

“Hang Seng Financial” believes that emerging nation gold purchases are indicative of a fundamental shift of wealth and global financial influence from the West to the East and continues to encourage clients to purchase gold and silver as a means to protect their wealth.