https://www.miningweekly.com

Tarnished silver price underperforms other metals, could reach $12/oz in weeks

10th November 2015

By: Henry Lazenby

Creamer Media Deputy Editor: North America

  

Font size: - +

TORONTO (miningweekly.com) – True to its nature, volatile silver prices have underperformed the base and precious metals complex in recent months, underpinned by rising output and lower investor and industrial demand, a new Bank of America (BofA) Merrill Lynch Global Research report has found.

The banking group noted that silver’s volatility relative to the S&P500 index had been increasingly visible in the gold:silver ratio, which had been rising towards levels not seen since the 1990s.

“Keeping in mind that both industrial and investor demand are important for silver, we believe the headwinds have emanated from both sectors,” the Global Commodity Research team stated.

BofA analysts said China’s silver imports had tapered off in the past couple of years, owing to ongoing weakness in manufacturing and investment activity.

Jewellery demand had been somewhat disappointing, while photovoltaic installations were weak too, particularly in 2014, although they had rebounded this year, BofA said.

Investment demand had also been muted, which was influenced, to some extent, by the losses especially retail investors sustained when the metal dropped from $50/oz.

Looking beyond China, physically backed exchange-traded funds had virtually seen no inflows since 2013 – in fact, the risk that ongoing elevated assets under management at these vehicles might be liquidated given lacklustre markets was perhaps the single biggest risk to silver in the near term, the team advised.

BofA warned that one of its silver price models suggested the metal could fall to $12/oz in the coming weeks. “In our view, the upcoming US Federal Reserve rate hike, now scheduled for December according to our economics team, is a formidable obstacle to silver, partially because US inflation has so far remained subdued.

“Having said that, we note that average hourly earnings increased by 2.5% year-on-year in October, partially because the labour market is approaching a nonaccelerating inflation rate of unemployment.

“We follow this development closely given reflationary environments can be bullish for silver; in fact, a pick-up of inflation, accompanied by a reacceleration of global economic activity could help silver bottom out as we move towards the second half of 2016,” BofA said.

The silver spot price in New York on Monday lost more than $0.20 /oz to $14.49/oz.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Werner South Africa Pumps & Equipment (PTY) LTD
Werner South Africa Pumps & Equipment (PTY) LTD

For over 30 years, Werner South Africa Pumps & Equipment (PTY) LTD has been designing, manufacturing, supplying and maintaining specialist...

VISIT SHOWROOM 
M and J Mining
M and J Mining

M and J Mining are leading suppliers of physical support systems as used by the underground mining industry. Our selection of products are not...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.138 0.179s - 90pq - 2rq
Subscribe Now