Drivers for Silver Price Up Trend
Commodities / Gold and Silver 2013 Aug 20, 2013 - 12:30 PM GMTBy: Money_Morning
Tony Daltorio writes: After slipping nearly 40% this year by June, silver prices today have rebounded, and now trade near $23 an ounce. Silver ended the week up 14%.
This puts the precious metal at a level not seen since May.
There are several reasons for this move up in silver prices - reasons that will carry silver prices to $40 an ounce - and then $60 an ounce - by 2014.
With a lot of "crash talk" making the rounds - like the Hindenburg Omen - now's a good time to be taking gains in the white metal.
Here are four reasons today's silver price is the start of more double-digit weekly gains in 2013...
Silver Prices Today: Four Reasons for the Climb
Silver Price Catalyst #1: Short Covering
Many speculative hedge funds had gone short silver, expecting more downside to the sharp selloff that occurred in the precious metals space. The hedge fund community had the lowest amount of net-long positions in silver in about 10 years.
Some of those bets have now been covered, with the funds buying back silver futures contracts. But there may be more short covering to go.
Walter de Wet, head of commodities research at Standard Bank, told the Financial Times that U.S. Commodity Futures Trading Commission data showed the speculative market "has been building a large short position which is yet to unwind."
As silver moves higher, shorts will rush to cover, and give prices an even bigger boost.
Silver Price Catalyst #2: Physical Demand for Coins
Another factor at work here is similar to what's been happening in the gold market: strong physical demand for silver.
That can be seen in the coin market.
The latest numbers from the U.S. Mint show that there were 31 million ounces of silver coins sold so far this year. In 2012, there were only 33.7 million ounces of silver coins sold all year.
Other mints around the world are showing a similar pattern.
Take the Royal Canadian Mint, for example.
It said this week that demand for both gold and silver products remained "very strong." The Mint added that people seemed to be buying the coins on every dip in precious metals prices.
Sales of silver coins were particularly strong.
Chris Carkner, managing director of sales for bullion, refinery and exchange-traded products at the Royal Canadian Mint, told Kitco "Year-to-date, after the second quarter, we've had record volume for silver Maple Leafs, the greatest we've had in the over 25 years that we've produced them."
Silver Price Catalyst #3: This Country's Exploding Investor Interest
North American investors aren't alone in their attraction for physical silver.
So is another region of the globe we've touched on before, one that's key to the future of silver prices...
I'm talking about India.
The current Indian government and its central bank have placed all the blame for a flagging economy and plunging currency squarely on the country's investors' affinity for gold.
The government has placed restrictions and tariffs on the importation of gold into the country.
That has had the effect of making the smuggling of gold more profitable than the smuggling of drugs. But more importantly to investors, it has lit a fire under Indians' desire for silver.
Silver imports into India in the second quarter of 2013 surged an astonishing 259% to 857 metric tons. The month of July alone saw imports of 275 metric tons, the second-highest monthly import number in the past five years.
To put the April-July import figures for silver into perspective, 857 tons is the equivalent of roughly a third of the world's monthly production of silver.
It looks as though ordinary Indian citizens are simply substituting silver for gold until their government ends its 'war' on gold.
All the silver purchases are also a good way for investors in India to insulate themselves long-term against a plunging currency. The Indian rupee has tumbled to a record low against the U.S. dollar, down 26.5% over the past two years.
Bottom line: the global trend toward buying physical silver continues.
Silver Price Catalyst #4: Solar
This final one came straight from Money Morning Global Resources Specialist Peter Krauth.
I'll let him explain:
"One rapidly growing source of silver demand is in photovoltaic solar panels. Since 2000, silver consumption from this sector has risen by 50% annually. In 2002 silver usage for solar panels stood at one million ounces, but grew to 60 million ounces by 2011. But now a number of nations are make a strong push for solar-generated electricity. Japan last year announced it would pay utilities three times the rate for electricity generated by solar power. Now China has raised solar-generating capacity targets by 67% from previous levels, from a 21-gigawatt target in 2015 to a massive 35 gigawatts. It's now projected that demand from Japan and China alone will soak up nearly 11% of world mine supply."
Now that you know where silver is headed, here's how to buy it so you don't miss these profits...
Source :http://moneymorning.com/2013/08/16/silver-prices-today-riding-higher-on-these-four-trends/
Money Morning/The Money Map Report
©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com
Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.
Money Morning Archive |
© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.
