Silver's Time Will Come; TDS Sees Silver Outperforming Gold In 2019
BOSTON - (Kitco News)- Silver has not been the shiningmetal that TD Securities was expecting it to be in 2018, but the firm is notgiving up on the precious metal as analysts see it outperforming gold in 2019.
In an interview with Kitco Newsduring the London Bullion Market Association’s 2018 conference, Bart Melek,head of commodity strategy at TDS, said there have been several factorsconspiring against the entire precious-metal sector, such as rising interestrates, a strong U.S. dollar and a weaker yuan. For silver specifically, Melekadded that the metal was further weighed down by concerns that the globaleconomy will be hurt because of a worldwide trade war.
“Right now we think the market isunderpricing silver’s potential,” he said.
Melek added said that while thetrade war between China and the U.S. “can still get ugly,” his firm still seespositive economic growth next year, which should support silver prices,boosting the metal’s industrial demand.
“We don’t see global economycollapsing next year. We see the global economy growing 3.5% and that shouldlead to higher demand for silver,” he said. “You can’t get too negative onsilver when you see higher demand and flat primary supplies. We are certainly notseeing new silver production or infrastructure coming online any time soon.”
Melek said that TDS sees silverprices pushing to $17 an ounce by the end of next year, representing a gain of15.5% from current prices; December silver futures last traded at $14.70 anounce, up more than 2% on the day.
Meanwhile, the Canadian bank seesgold prices ending next year at $1,325 an ounce, a gain of 7.5% from currentprices. December gold futures last traded at $1,232.90 an ounce, up nearly 1.5%on the day.
Melek’s comments come as goldcontinues to outperform silver with the gold-silver ratio holding near itshighest level in more than a decade. However, the grey metal appears to be building some momentum, seeing its best day in nearly two years.
Melek said that a rally in goldprices should also support silver, which has double the volatility compared tothe yellow metal. He added that TDS is optimistic about gold as equity marketsfell into correction territory last month, losing almost 7%.
“The balance of risks is that equities willcontinue to go lower as they have gone higher for such a long time,” he said.“That is helpful for the precious-metals complex. Weaker equities shouldgalvanize some portfolio managers to reweigh their exposure to gold andsilver.”
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.  |