Lack of Chinese Growth Hurting Silver ETFs

iNVEZZ.com reported that silver-backed exchange-traded funds (ETFs) have performed poorly in recent weeks on the back of “figures showing muted growth in China,” which is the top growth market for the precious metal.

Specifically, the three top silver ETFs have seen double-digit percentage declines in the last three months.

As quoted in the market news:

Silver prices are closely correlated with China’s economy and its industrial sector in particular. Silver is used in photovoltaic(solar energy) generators, and China plans a major expansion of its use of solar power into the future. In a rough estimation, 1 gigawatt of solar power requires about 3 million ounces of silver and China is considering building enough generators to produce 100 gigawatts of solar energy by 2020. This equates to a total forecasted requirement of some 300 million ounces for China’s energy sector alone – more than a third of the annual global production of silver.

Hence it is no surprise that silver commodity prices and silver ETFs have been hurt by a string of bearish data from China over the past few weeks. Most recently, HSBC posted below-par manufacturing PMI for April today, logging the gauge at 49.2, meaning that the manufacturing sector has contracted. Earlier, last week saw industrial production for March grow 5.6 percent on an annual basis, well below the 6.9 forecasts. GDP growth, quarter-on-quarter, also failed to meet expectations, clocking 1.3 percent. Earlier in April, CPI data stoked significant bearish sentiment, as consumer prices were reported to have decreased 0.5 percent on a monthly basis in March, though still 1.4 percent higher on an annual basis, while PPI was 4.6 percent in the red, year-on-year.

Click here to read the full iNVEZZ.com report.