Investment Demand Powers Silver’s Slow Ascent
Commodities / Gold and Silver 2011 Nov 02, 2011 - 04:59 AM GMTBy: Anthony_David
Silver prices are known to be volatile given its varying demand in the investment and industrial sectors. Recent times have been trying, as demand in both sectors has been slow. In late October, silver traded at $30.58 per ounce, a fall of 2.08%.
China’s industrial sector accounts for 70% of the country’s demand for silver but with a slowing economy, the demand for the precious metal has naturally slowed down too. Aaron Back of The Wall Street Journal wrote, “China’s trade surplus narrowed in September as exports to the European Union fell, showing that faltering economies abroad are beginning to affect China.”
Commenting on China’s slowing consumption of silver, commodities analyst Suki Cooper of Barclay’s Capital said, “The fundamentals still look very weak. The downside still looks much more vulnerable, given that we’re not seeing the same strength in industrial demand that we have seen previously, and given that mine supply still looks very healthy.”
The Eurozone’s debt issues have also added an element of uncertainty to silver markets. The continuous ambiguities in the European economies, especially those of Greece and France, are affecting all the markets. Jim Wyckoff of Kitco said, “The uncertainty surrounding the latest efforts by European officials to solve the EU debt and financial crisis have limited buying interest in the precious metals this week. A firmer US dollar index as the trading session progressed Thursday also worked to pressure the precious metals markets.”
Opinions about the future of silver over the next few quarters are varied, but not greatly. While participating in a debate at the recent Silver Summit held at Spokane, WA, Jeffrey Christian, managing director and founder of the CPM Group said that he expected silver prices to range between $26 and $42 per ounce over the next quarter. He expects quarterly prices in 2012 to average at around $30 to $33 per ounce, and between $26 and $38 per ounce over the whole year.
Germany’s Commerzbank expects silver prices to average at $35 per ounce in the ongoing quarter and reach $40 per ounce by the end of 2012. In a statement, the bank said, “The deteriorating global economic outlook has had repercussions on the price of silver, the silver price is likely to recover from its current weakness and resume its upward trend in 2012.”
By Anthony David
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