Metals Focus: Silver Price Could Bottom in 2015

Mineweb’s Lawrence Williams published an article in which he states that analysts at Metals Focus, a precious metals consultancy, see the silver price bottoming in late 2015. The firm believes that “meaningful gains” are possible in 2016.

Expanding, Williams states:

While silver bulls might see this as yet another ultra-bearish outlook for the metal, at least in the short to medium term, Metals Focus does at least see $14 an ounce as the likely downside low, which is certainly less bearish than some other analysts have suggested. It is also perhaps a little less negative on gold than some of the more bearish commentators, seeing it making a recovery after any Fed rate hikes, which it sees as possibly beginning in Q3 this year. Recent statistics have shown that the U.S. ‘recovery’ is far from strong despite the spin put on it by politicians and the Fed. Given a lack of inflationary pressure any Fed rate increases are thus likely to be both modest and gradual and keep them negative in real terms. Metals Focus thus comments in its latest weekly letter that the realisation that rates will remain lower for longer will not only see the unwinding of short bets, but also encourage investors to reconsider the investment case for precious metals.

Much of silver, and gold’s, decline since the beginning of the year has been due to the rise in the rampant dollar – the dollar index has risen around 10% since January 1 – which makes any decline in metal prices less relevant in most other currencies.

That said, he points out:

Silver demand is always hugely difficult to predict, which accounts for much of the metal’s volatility. It has a substantial industrial usage element – much of which nowadays is in potential growth sectors like electronics, solar power and biocides now that the decline in photographic usage has largely run its course. There remains a very strong investment element as has been seen in silver ETFs, purchases of silver coins and continuing strong demand in major consumer markets like India where price declines tend to stimulate demand further.

Click here to read the full Mineweb report.