These Factors Will Support Silver Prices In 2018 - Silver Institute
(Kitco News)- While investors can expect to see volatility in silverprices through 2018, the market has plenty of room to move higher due togrowing demand and shrinking supply, according to the Silver Institute.
In a report released Thursday, Michael DiRienzo, executive director of the institute saidthat strong industrial demand, jewelry demand and renewed investor interestwill continue to support the market as mine production could decline for thesecond consecutive year by 2% in 2018.
DiRienzo’s commentscome as investors closed the books on what was a dismal year for silver - worstperformer in the precious metals space. Last year, the gold/silver ratio roseto a multi-year high.
Kitco.com shows thatthe ratio remains at an elevated level, trading around 78 points. March silverfutures last traded at $16.99 an ounce, down 1% on the day.
Looking at thedemand side, DiRienzo said that electrification of the automotive sector andgrowing solar power demand are two important factors that will boost silver’sindustrial demand.
He added that silverdemand for photovoltaic cells could hit a record after the sector is estimatedto have consumed 92 million ounces of the precious metal in 2017.
“Although silver isused in small quantities in some applications, the diversity is large, and thecontinued rising volumes of applications are expected to again have a positiveimpact on silver consumption from industrial products this year,” he said.
Looking at thejewelry market, DiRienzo said that the institute is forecasting demand to rise4% in 2018, up from a 1% increase seen in 2017.
One of thedisappointing sectors in silver last year was physical bullion demand. Lastyear, the U.S. Mint saw its worst sales of America Eagle silver coins in 10years. DiRienzo pointed outthat thesilver market suffered last year because of competition from equity markets andcryptocurrencies.
However, he addedthat the institute expects that investors will return to the bullion space in2018. “With equity and bonds in “expensive” territory and Bitcoin’sstratospheric increase taking a breather during the beginning of 2018, weexpect some investment to flow back into precious metals.”
In the paper market,DiRienzo said that they see demand for silver-backed exchange traded productsto rise 3% in 2018, adding to recording holdings of 670 million ounces recordedin 2017.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.