Best of the Week
Most Popular
1. TESLA! Cathy Wood ARK Funds Bubble BURSTS! - 12th May 21
2.Stock Market Entering Early Summer Correction Trend Forecast - 10th May 21
3.GOLD GDX, HUI Stocks - Will Paradise Turn into a Dystopia? - 11th May 21
4.Crypto Bubble Bursts! Nicehash Suspends Coinbase Withdrawals, Bitcoin, Ethereum Bear Market Begins - 16th May 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.Cathy Wood Ark Invest Funds Bubble BURSTS! ARKK, ARKG, Tesla Entering Severe Bear Market - 13th May 21
7.Stock Market - Should You Be In Cash Right Now? - 17th May 21
8.Gold to Benefit from Mounting US Debt Pile - 14th May 21
9.Coronavius Covid-19 in Italy in August 2019! - 13th May 21
10.How to Invest in HIGH RISK Tech Stocks for 2021 and Beyond - Part 2 of 2 - 18th May 21
Last 7 days
How to Trade Binance Vanilla Options for the First Time on Bitcoin Crypto's - 2nd Aug 21
From vaccine inequality to economic apartheid - 2nd Aug 21
Stock Market Intermediate Top Reached - 2nd Aug 21
Gold at a Crossroads of Hawkish Fed and High Inflation - 2nd Aug 21
Bitcoin, Crypto Market Black Swans from Google to Obsolescence - 1st Aug 21
Gold Stocks Autumn Rally - 1st Aug 21
Earn Upto 6% Interest Rate on USD Cash Deposits with Binance Crypto Exchange USDC amd BUSD - 1st Aug 21
Vuze XR VR 3D Camera Takes Near 2 Minutes to Turn On, Buggy Firmware - 1st Aug 21
Sun EXPLODES! Goes SuperNova! Will Any planets Survive? Jupiter? Pluto? - 1st Aug 21
USDT is 9-11 for Central Banks the Bitcoin Black Swan - Tether Un-Stable Coin Ponzi Schemes! - 30th Jul 21
Behavior of Inflation and US Treasury Bond Yields Seems… Contradictory - 30th Jul 21
Gold and Silver Precious Metals Technical Analysis - 30th Jul 21
The Inadvertent Debt/Inflation Trap – Is It Time for the Stock Market To Face The Music? - 30th Jul 21
Fed Stocks Nothingburger, Dollar Lower, Focus on GDP, PCE - 30th Jul 21
Reverse REPO Market Brewing Financial Crisis Black Swan Danger - 29th Jul 21
Next Time You See "4 Times as Many Stock Market Bulls as There Are Bears," Remember This - 29th Jul 21
USDX: More Sideways Trading Ahead? - 29th Jul 21
WEALTH INEQUALITY WASN'T BY HAPPENSTANCE! - 29th Jul 21
Waiting On Silver - 29th Jul 21
Showdown: Paper vs. Physical Markets - 29th Jul 21
New set of Priorities needed for Unstoppable Global Warming - 29th Jul 21
The US Dollar is the Driver of the Gold & Silver Sectors - 28th Jul 21
Fed: Murderer of Markets and the Middle Class - 28th Jul 21
Gold And Silver – Which Will Have An Explosive Price Rally And Which Will Have A Sustained One? - 28th Jul 21
I Guess The Stock Market Does Not Fear Covid - So Should You? - 28th Jul 21
Eight Do’s and Don’ts For Options Traders - 28th Jul 21
Chasing Value in Unloved by Markets Small Cap Biotech Stocks for the Long-run - 27th Jul 21
Inflation Pressures Persist Despite Biden Propaganda - 27th Jul 21
Gold Investors Wavering - 27th Jul 21
Bogdance - How Binance Scams Futures Traders With Fake Bitcoin Prices to Run Limits and Margin Calls - 27th Jul 21
SPX Going for the Major Stock Market Top? - 27th Jul 21
What Is HND and How It Will Help Your Career Growth? - 27th Jul 21
5 Mobile Apps Day Traders Should Know About - 27th Jul 21
Global Stock Market Investing: Here's the Message of Consumer "Overconfidence" - 25th Jul 21
Gold’s Behavior in Various Parallel Inflation Universes - 25th Jul 21
Indian Delta Variant INFECTED! How infectious, Deadly, Do Vaccines Work? Avoid the PCR Test? - 25th Jul 21
Bitcoin Stock to Flow Model to Infinity and Beyond Price Forecasts - 25th Jul 21
Bitcoin Black Swan - GOOGLE! - 24th Jul 21
Stock Market Stalling Signs? Taking a Look Under the Hood of US Equities - 24th Jul 21
Biden’s Dangerous Inflation Denials - 24th Jul 21
How does CFD trading work - 24th Jul 21
Junior Gold Miners: New Yearly Lows! Will We See a Further Drop? - 23rd Jul 21
Best Forex Strategy for Consistent Profits - 23rd Jul 21
Popular Forex Brokers That You Might Want to Check Out - 22nd Jul 21
Bitcoin Black Swan - Will Crypto Currencies Get Banned? - 22nd Jul 21
Bitcoin Price Enters Stage #4 Excess Phase Peak Breakdown – Where To Next? - 22nd Jul 21
Powell Gave Congress Dovish Signs. Will It Help Gold Price? - 22nd Jul 21
What’s Next For Gold Is Always About The US Dollar - 22nd Jul 21
URGENT! ALL Windows 10 Users Must Do this NOW! Windows Image Backup Before it is Too Late! - 22nd Jul 21
Bitcoin Price CRASH, How to SELL BTC at $40k! Real Analysis vs Shill Coin Pumper's and Clueless Newbs - 21st Jul 21
Emotional Stock Traders React To Recent Market Rotation – Are You Ready For What’s Next? - 21st Jul 21
Killing Driveway Weeds FAST with a Pressure Washer - 8 months Later - Did it work?- Block Paving Weeds - 21st Jul 21
Post-Covid Stimulus Payouts & The US Fed Push Global Investors Deeper Into US Value Bubble - 21st Jul 21
What is Social Trading - 21st Jul 21
Would Transparency Help Crypto? - 21st Jul 21
AI Predicts US Tech Stocks Price Valuations Three Years Ahead (ASVF) - 20th Jul 21
Gold Asks: Has Inflation Already Peaked? - 20th Jul 21
FREE PASS to Analysis and Trend forecasts of 50+ Global Markets by Elliott Wave International - 20th Jul 21
Nissan to Create 1000s of jobs with electric vehicle investment in UK - 20th Jul 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Can Silver Keep Pace With Gold?

Commodities / Gold and Silver 2016 Apr 09, 2016 - 12:45 PM GMT

By: David_Morgan

Commodities

By Debbie Carlson | Contributor: Some investors like silver’s dual status as an alternative currency and industrial commodity.

Gold’s surprising strength in price is capturing headlines, but another precious metal, silver, is chasing gold’s coattails – without the fanfare.

Silver futures are up about 8.5 percent this year, making it stand out among other commodities and financial markets. Investors snapped up coins, with U.S. Mint data showing March silver coin sales were up 17 percent over the previous year’s figure. Inflows into silver-backed exchange-traded funds witnessed their highest monthly inflow since December 2010, according to Commerzbank.


Still, gold’s 15 percent year-to-date gain outshines silver, which means the gray metal has some catching up to do if it wants to match gold’s performance. Even if silver’s price performance may not be as muscular as the yellow metal, market watchers said silver may have its own brighter outlook.

What’s ringing silver’s bell. Silver’s rise this year is its status as an alternative currency. Like gold, some investors bought silver during the uncertainty affecting global financial markets in the first quarter, says Colin Cieszynski, chief market strategist at Toronto-based CMC Markets.

With some of those concerns subsiding, silver and gold are off the highs set in March.

But unlike its wealthier cousin, silver also has a strong industrial component. It’s used in photovoltaic cells for solar panels and in some medical devices for its anti-microbial properties.

With industrial demand for commodities in general weak, this has limited silver’s 2016 rally.

“The hybrid nature of this precious metal as an alternative investment like gold and as a metal with industrial use means that silver sometimes performs better than gold and sometimes worse. This phenomenon is strengthened by the fact that the silver market is a ‘smaller’ market than the gold market, meaning that just a few transactions can lead to price volatility,” Commerzbank analysts say in a recent report.

Silver has positive supply and demand factors working in its favor for 2016, and the bank forecasts an average fourth quarter price of $17 an ounce. Silver mine supply is falling as low commodity prices caused miners to limit production of metals in general.

The supply of scrap silver, that is silver recycled from another use, also is falling.

Silver demand for use in photovoltaic cells should grow, says The Silver Institute, a silver-industry based research and promotional organization. When silver prices were close to $40 an ounce several years ago, solar manufacturers looked for alternative material, but with prices now around $15 an ounce, silver use is expected to increase.

The Silver Institute forecasts silver’s use in solar energy in 2016 could surpass the record set in 2011 “as global solar panel installations are expected to grow at a high single-digit pace.”

Analysts at Macquarie Capital (Europe) Limited have a fourth-quarter silver price forecast of $16. There is the potential for silver prices to fall in the near term, they say, but silver and gold could benefit if inflation returns.

“Central banks prefer to run the risk of higher inflation than slower growth. We think this could be a surprise upside factor in 2017, and help gold and particularly silver then and in the following years,” they say.

John Butler, London-based vice president and head of wealth services for GoldMoney, says if the outlook for the global economy improves, silver could outperform gold because of its industrial role.

“Silver has weaker claims as an alternative currency, but it does better when there’s a stronger economy,” Butler says. However, if concerns about the global economy persist, it will likely lag gold.

How to invest in silver. The simplest way to invest in silver is in either silver coins or exchange-traded funds. For people who want to own coins, they also need to think about storage, such as a safety-deposit box.

To get exposure to the silver price, without the worry about storage, the biggest ETF by assets under management is iShares Silver Trust (ticker: SLV), which tracks the daily silver bullion price.

Although much of silver’s mine production comes as a byproduct of gold, copper, lead and zinc production, there are a few pure-play silver mining companies.

David Morgan, an independent commodities analyst and publisher of The Morgan Report, says his two top equities picks are London-based Fresnillo, which trades on the London Stock Exchange and operates silver mines in Mexico, and Australian-based gold miner Doray Minerals, which trades on the Australian Securities Exchange. He owns stock in both companies.

“Doray is performing well and they’re a growth company. Fresnillo had very solid 2015 results, too,” he says.

Regarding silver prices, Morgan says prices long term will rise, but the in short term, he expects prices to weaken. “I think we’ll see some summer doldrums and prices to go down from here, before turning back up into year end,” he says.

Cieszynski says he’s encouraged that several of the silver-mining stocks are outpacing the rally in the metal. Top performers include Silver Wheaton Corp. (SLW), up nearly 30 percent on the year, while Pan-American Silver Corp. (PAAS) is up 60 percent and Endeavor Silver Corp. (EXK) is up 70 percent.

“That’s always important. I look at the stocks as a leading indicator because any time you do a forecast for a mining stock it includes a forecast of the production as well as the price,” Cieszynski says. “If the stocks are outpacing the metal price then people are figuring that production is going to come back around or the price is going to go up.”

David Morgan is a precious metals aficionado armed with degrees in finance and economics as well as engineering, he created the Silver-Investor.com website and originated The Morgan Report, a monthly that covers economic news, overall financial health of the global economy, currency problems, and the key reasons for investing in precious metals.

As publisher of The Morgan Report, he has appeared on CNBC, Fox Business, and BNN in Canada. He has been interviewed by The Wall Street Journal, Futures Magazine, The Gold Report and numerous other publications. If there is only one thing to teach you about this silver bull market it is this… 90% of the move comes in the last 10% of the time! Where will you be when this happens?

David Morgan

Mr. Morgan has followed the silver market for more than thirty years. He wrote the book, Get the Skinny on Silver Investing. Much of his Web site, Silver-Investor.com, is devoted to education about the precious metals, it is both a free site and does have a members only section. To receive full access to The Morgan Report click the hyperlink.

Disclaimer: The opinions expressed above are not intended to be taken as investment advice. It is to be taken as opinion only and I encourage you to complete your own due diligence when making an investment decision.

David Morgan Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in