Neils Christensen – While expecting gold prices to rally to $1,400 an ounce in 2017 on continued investor demand, ETF Securities looks for silver to outperform as industrial demand drives prices.
In a recently published report, analysts at ETF Securities said that they see silver prices trading in a range of between $22 and $24 an ounce in 2017. With silver prices last trading Wednesday at $17.70 an ounce, that would mean at least a 24% gain for the precious metal.
ETF Securities’ gold-price target of between $1,400 an ounce and $1,450 would represent a gain of 10% from the precious metal’s current price of $1,272.60 an ounce.
“We are constructive on gold next year but we see more potential upside for silver given its high correlation to the industrial-production cycle, which be driven by the continued recovery in the global economy,” said Maxwell Gold, director of investment strategy at the firm, in an phone interview with Kitco News.
The investment firm noted that there is an 80% correlation between gold and silver and while silver has benefited from gold’s unprecedented investor demand, silver’s fundamental supply-and-demand picture is what will drive the price higher next year.
Gold noted that his firm is expecting to see strong silver demand in electronic components, especially as companies use the metal as a substitute for more expensive options like gold — also known as thrifting.
He added that the solar sector, especially in China — now the global leader — will to continue grow. At the same time, ETF Securities expects to see a drop in supply as mining production falls as a result of lower capital expenditures.
“We do see the importance of silver’s investor demand, but overall silver is much more dependent on supply-and-demand factors,” he said. “We see constructive fundamentals for silver going forward both by continued expansion of global industrial activity and reduced mine activity.”
ETF Securities’ gold and silver price forecasts would push the gold/silver ratio back to historic norms at 64. The ratio was trading Tuesday around 72, its highest level since early June.
Both gold and silver have been two of the top assets so far this year. Investor demand as a result of global negative bond yields have pushed gold prices up 19%. Silver, because of its higher volatility, is up 28% since the start of the year.
Ben Traynor – Simon Popple explained why a specific subset of silver miners could soon find themselves in a very enviable position immediately after the US election. Practically overnight these guys could become the companies every silver investor wants to own. There’s potential for a huge, rapid move here.
But that’s not what grabbed me.
What grabbed me is that this sector has solid fundamentals whatever happens in America two weeks from now.
To show you what I mean I’ve knocked up a quick chart below. It shows previous silver bull markets and the kind of percentage gains investors could have made.
It also shows how far silver has moved during the current bull market – if indeed this is (as I’m inclined to believe) the start of such a thing.
Picking the exact dates to call the “start” and “end” of earlier bull markets is a slightly arbitrary exercise. But the broad message remains the same.
A silver bull market is a multi-year thing. And historically they have delivered very strong returns.
For our purposes here I’ve picked out the following silver bull markets and the potential gains for an investor who held silver bullion:
November 1971-February 1974 (415% potential gain)
June 1977-January 1980 (1,041% potential gain)*
March 2003-March 2008 (378% potential gain)
October 2008-April 2011 (421% potential gain)
I’ve put an asterisk next to the bull market that ended in 1980, because that run-up in silver prices owed a lot to the Hunt brother’s failed attempt to corner the silver market.
Still, it shows the potential for silver to move very quickly when a lot of money enters this small, overlooked-by-the-mainstream market.
My point – as this chart illustrates – is that there could be plenty of upside left for precious metals investors who build positions now:
Silver’s 2016 gains so far are way below what earlier bull markets delivered
That thick black line in the bottom left corner is what silver’s done since January. Not a lot, basically.
Against a global backdrop of historically high indebtedness and increasingly aggressive monetary policy, it’s a brave investor who rules out the prospect of a new bull market in precious metals.
And history shows us that when a bull market in silver takes hold, it can send bullion prices much, much higher.
That’s before you consider the fact that silver miners can deliver returns that are multiples of the return offered by the metal itself…
And before you consider what Simon’s uncovered about how the US election could have a direct and immediate impact on the silver market.
I felt the best way to share his idea with you was to get Simon on camera, kick it about a bit and lay out exactly why we could see an immediate move in a specific corner of the silver market two weeks from now.
So that’s exactly what we’re putting together.
Next Wednesday, 2nd of November, Simon and I will broadcast an urgent analysis at 7pm.
Please check back for new articles and updates at Commoditytrademantra.com
For More details on Trade & High Accuracy Trading Tips and ideas - Subscribe to our Trade Advisory Plans. : Moneyline