Best of the Week
Most Popular
1. 2019 From A Fourth Turning Perspective - James_Quinn
2.Beware the Young Stocks Bear Market! - Zeal_LLC
3.Safe Havens are Surging. What this Means for Stocks 2019 - Troy_Bombardia
4.Most Popular Financial Markets Analysis of 2018 - Trump and BrExit Chaos Dominate - Nadeem_Walayat
5.January 2019 Financial Markets Analysis and Forecasts - Nadeem_Walayat
6.Silver Price Trend Analysis 2019 - Nadeem_Walayat
7.Why 90% of Traders Lose - Nadeem_Walayat
8.What to do With Your Money in a Stocks Bear Market - Stephen_McBride
9.Stock Market What to Expect in the First 3~5 Months of 2019 - Chris_Vermeulen
10.China, Global Economy has Tipped over: The Surging Dollar and the Rallying Yen - FXCOT
Last 7 days
UK Population Growth - Latest ONS Immigration Statistics and Consequences - 24th Mar 19
The Fed Follows Trump's Tweets, And Does The Right Thing - 24th Mar 19
Yield Curves, 2yr Yield, SPX Stocks and a Crack Up Boom? - 24th Mar 19
Risk/Reward in Silver Favors Buying Now, Not Waiting for Big Moves - 23rd Mar 19
Similarities Between Stock Market Today and Previous Bull Market Tops - 23rd Mar 19
Stock Market DOW Seasonal Trend Analysis - 23rd Mar 19
US Dollar Breakdown on Fed Was Much Worse Than It Looks - 23rd Mar 19
Gold Mid-Tier GDXJ Stocks Fundamentals - 23rd Mar 19
Which Currency Pairs Stand to Benefit from Prevailing Risk Aversion? - 23rd Mar 19
If You Get These 3 Things Right, You’ll Never Have to Worry About Money - 22nd Mar 19
March 2019 Cryptocurrency Technical Analysis - 22nd Mar 19
Turkey Tourist Fakes Market Bargains Haggling Top Tips - 22nd Mar 19
Next Recession: Finding A 48% Yield Amid The Ruins - 22nd Mar 19
Your Future Stock Returns Might Unpleasantly Surprise You - 22nd Mar 19
Fed Acknowledges “Recession Risks”. Run for the Hills! - 22nd Mar 19
Will Bridging Loans Grow in Demand and Usage in 2019? - 22nd Mar 19
Does Fed Know Something Gold Investors Do Not Know? - 21st Mar 19
Gold …Some Confirmations to Watch For - 21st Mar 19
UKIP No Longer About BrExit, Becomes BNP 2.0, Muslim Hate Party - 21st Mar 19
A Message to the Gold Bulls: Relying on the CoT Gives You A False Sense of Security - 20th Mar 19
The Secret to Funding a Green New Deal - 20th Mar 19
Vietnam, Part I: Colonialism and National Liberation - 20th Mar 19
Will the Fed Cut its Interest Rate Forecast, Pushing Gold Higher? - 20th Mar 19
Dow Jones Stock Market Topping Pattern - 20th Mar 19
Gold Stocks Outperform Gold but Not Stocks - 20th Mar 19
Here’s What You’re Not Hearing About the US - China Trade War - 20th Mar 19
US Overdosing on Debt - 19th Mar 19
Looking at the Economic Winter Season Ahead - 19th Mar 19
Will the Stock Market Crash Like 1937? - 19th Mar 19
Stock Market VIX Volaility Analysis - 19th Mar 19
FREE Access to Stock and Finanacial Markets Trading Analysis Worth $1229! - 19th Mar 19
US Stock Markets Price Anomaly Setup Continues - 19th Mar 19
Gold Price Confirmation of the Warning - 18th Mar 19
Split Stock Market Warning - 18th Mar 19
Stock Market Trend Analysis 2019 - Video - 18th Mar 19
Best Precious Metals Investment and Trades for 2019 - 18th Mar 19
Hurdles for Gold Stocks - 18th Mar 19
Pento: Coming QE & Low Rates Will Be ‘Rocket Fuel for Gold’ - 18th Mar 19
"This is for Tommy Robinson" Shouts Knife Wielding White Supremacist Terrorist in London - 18th Mar 19
This Is How You Create the Biggest Credit Bubble in History - 17th Mar 19
Crude Oil Bulls - For Whom the Bell Tolls - 17th Mar 19
Gold Mining Stocks Fundamentals - 17th Mar 19
Why Buy a Land Rover - Range Rover vs Huge Tree Branch Falling on its Roof - 17th Mar 19
UKIP Urged to Change Name to BNP 2.0 So BrExit Party Can Fight a 2nd EU Referendum - 17th Mar 19

Market Oracle FREE Newsletter

Stock Market Trend Forecast March to September 2019

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

6 Critical Money Making Rules