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January 31st, 2012
Silver Futures – Record industrial demand for silver and resurging investor interest is diminishing a supply surplus, driving the metal used in everything from solar panels to batteries into its best start to a year in almost three decades.
Manufacturers will use 15,415 metric tons, 2.5 percent more than in 2011 and reducing the glut by 41 percent to 3,297 tons, Barclays Capital estimates. Investors may buy 2,000 tons through exchange-traded products, after selling 1,300 tons last year, Morgan Stanley predicts. Prices will average $37.50 an ounce in the fourth quarter, 11 percent more than now, the median estimate in a Bloomberg survey of 13 analysts shows.
Silver futures rallied 25 percent since closing at an 11-month low in December, entering a bull market on mounting confidence that another global recession will be avoided even as the World Bank and International Monetary Fund cut their growth forecasts. Prices had plunged 44 percent in eight months, making it the most volatile of any metal tracked by Bloomberg, as expansion slowed from Europe to China, crimping demand for commodities.
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January 23rd, 2012
Silver futures and gold both settled at six-week highs Monday as a weaker dollar boosted demand for alternative investments amid a murky economic outlook.
Gold futures for February delivery, the most active contract, rallied $14.30, or 0.9%, to settle at $1,678.30 a troy ounce on the Comex division of the New York Mercantile Exchange. This was the highest settlement price since settling at $1,716.80 a troy ounce on Dec. 9.
“Gold appears to be on course for a move to $1,690,” said Bob Haberkorn, senior market strategist at R.J. O’Brien. “I don’t see why this market wouldn’t push up to try to get above $1,700, maybe as early as this week.”
Gold futures continue to trade above their 200-day moving average after breaching that important technical indicator last week. The move is considered a positive by traders who follow technical analysis, as crossing above the average is seen as the beginning of a new uptrend.
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December 28th, 2011
Silver futures tumbled to a three-month low, gold fell, capping the longest slump since October 2009 as Europe’s deepening debt crisis drove commodities and stocks lower.
The euro dropped to an 11-month low against the dollar as lending to financial institutions sent the European Central Bank’s balance sheet to a record high. The Standard & Poor’s GSCI index of 24 raw materials and the MSCI World Index of equities were poised for the biggest declines in two weeks. Platinum approached the lowest since November 2009, and palladium dropped almost 3 percent.
The ECB said lending to euro-area banks jumped 214 billion euros ($276.9 billion) to 879 billion in the week ended Dec. 23, bolstering credit to the economy during the fiscal turmoil. Gold has slumped 19 percent from a record $1,923.70 an ounce on Sept. 6, partly on sales to cover losses in other markets. About $10 trillion has been erased from global equities (MXWD) since May.
“What’s going on in Europe is very worrying,” James Dailey, who manages $215 million at TEAM Financial Management LLC in Harrisburg, Pennsylvania, said in an e-mail. “The dollar’s strength is working against all commodities, including gold.”
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December 7th, 2011
Silver – In our linked charts for subscribers we noted this past weekend that the Commodity Futures Trading Commission (CFTC) commitments of traders report for silver (COT) remains more bullish than bearish. We put notations directly into the charts we share with Vultures (Got Gold Report Subscribers) so they can read at a glance our impressions of the COT action.
The main reason for that more bullish than bearish “read” is because the traders the CFTC classes as “commercial,” which includes bullion banks and swap dealers combined, are presently at a very low level of “net shortness.”
Not everyone does, but we subscribe to the theory that the collective positioning of the largest futures traders on the planet is a kind of window into their expectations for the price. The simple-Simon way of looking at the commercial COT positioning is that when the combined commercials are at a very low net short level (like right now), it means (to us) that they are not, repeat not, positioning as if they think the price of silver is heading a lot lower … and vice versa.
Just below is the graph we use to track the combined collective commercial net short positioning (LCNS) for Comex silver futures, aka the “legacy COT” report. In the graph, note just how low the blue line is and how rare it is for that line to be this low.
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October 20th, 2011
Silver, the best-performing and most-volatile precious metal of the past year, may rebound from a bear market as investors bet on growth in developing nations and an extended European debt crisis.
Silver futures may average $38 an ounce this quarter and rise to a record $42 by the final three months of 2012, compared with $30.155 at 5:10 p.m. in London today, according to the median in a Bloomberg survey of 11 analysts. The gains will mean record profit for producers Pan American Silver Corp. (PAA) and Fresnillo Plc (FRES), analyst estimates compiled by Bloomberg show.
China, the biggest emerging-market user, is expanding at more than five times the speed of the U.S., driving consumption of the precious metal most used in industry. Demand is also coming from investors looking for an alternative to cash and gold, which costs about 50 times more than silver. The 30-week correlation coefficient between the two metals is now at 0.82, from as low as 0.47 in 2005, data compiled by Bloomberg show, with a figure of 1 meaning the two move in lockstep.
“Prices now look relatively cheap to where they have been recently,” said David Wilson, an analyst at Societe Generale SA in London and the most accurate silver forecaster tracked by Bloomberg in the two years through June. “The backdrop is still very supportive for gold and we think that silver will leverage off the back of that. Emerging markets are going to be important for demand for sure.”
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