Silver To Surge Above $20 Within A Year - Metals Focus
This year’s volatile silver market could see a positive price rally within the next 12 months, surging 25% from the current value, one UK-based precious metals consultancy said.
Silver prices should see a strong rebound of at least 25% from their current levels of $16.27 to trade all the way at $20.25 within a year, Metals Focus analyst George Coles told Bloomberg on Tuesday.
The precious metal had a very volatile year so far. First, it rallied 17% in the beginning of 2017 and then lost all its gains despite declining mine output and growing industrial demand.
Weaker U.S. Growth To Support Silver
The main reason for the upcoming rally would be disappointing U.S. economic growth, which would translate into slower rate hike pace by the Federal Reserve, explained Coles, adding that this would mean good news for silver.
Markets are currently expecting the Fed to announce the reduction of its balance sheet in September and to hike rates one more time in December.
Another boost for silver could come from short covering by Comex speculators, Coles noted.
Even though silver prices saw a lot of resistance in the past three months, many investors are putting their money into silver ETFs, said Coles, with assets reaching a record 21,211 metric tons, valued at $11 billion.
But, at the same time, Coles noted that futures market remains bearish, as hedge funds hold the first net-short position in two years.
Coles pointed out that these two opposing trends are being supported by two different types of investors — smaller traders bought silver ETFs to diversify their portfolios, while large hedge funds shorted Comex futures.
“This may be a case of the smaller investors versus the big guys,” Coles said. “In this case, the smaller guys may be right.”
Other silver forecasts are less aggressive but are still optimistic. ETF Securities said in its latest projections that silver will outpace gold and reach $18.70 level by year-end and then retreat to $18.10 in the second quarter of 2018.
“Downside risks in both metals will be limited by the gradual nature of Federal Reserve policy changes,” ETF Securities said.
For Kitco News