Tags: silver | precious metal | price | record high

The Fate of Silver, 3 Years After its Peak Price

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Friday, 02 May 2014 06:11 PM Current | Bio | Archive

It was three years ago this week, on April 28, 2011, that silver peaked at $49 per ounce. It felt like the popping of a “bubble,” since silver traded at just $17.60 on July 28, 2010, rising 178 percent in nine months.

Now, we’re back below $20 again and the press has been attacking silver. This week’s “Commodities Corner” in Barron’s is titled, “Silver Buried by Supply Glut.”

But Jeff Clark, the senior precious metals analyst of Casey Research, posted a study of silver’s last seven bear markets for comparison. He showed that no previous bear market (covering the last 40 years) lasted longer than 3 1/2 years. That means there has been no silver bear market that would extend past the 3 1/2-year mark, which means October 2014.

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As for demand, the U.S. Mint has been selling a lot more silver coins in the last few years. The number of coins sold at the Mint set a new record high in 2013, when silver dropped to a more-affordable price level.

The data are even more impressive in the most recent month. In March, the Mint sold 5,354,000 ounces of silver coins, up 59.5 percent from the 3,356,500 ounces sold a year earlier, in March 2013. April sales have also been brisk enough that 2014’s total silver-coin sales could top the 2013 annual record.

Investor demand is also rising in the “paper silver” market with a 3.5 percent rise in silver-based exchange-traded products (ETPs), providing demand for an additional 17.5 million ounces.

Clark says “the net purchases by silver ETPs have totaled $354 million YTD, the largest influx of all commodity ETPs.”

In addition, there is far more silver buying in India. Gold has been targeted by the Indian government for penalties, while silver enjoyed relative free-trade status last year, so India imported 5,500 tonnes of silver in 2013 (20 percent of global demand and 180 percent above the 2012 totals). Chinese silver imports in February were 358 tonnes, up 90 percent (year over year). In Britain, February silver demand for jewelry sales rose 40 percent.

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The rumors of silver’s demise are exaggerated. Industrial demand for solar panels and other applications should increase, while investment demand should remain strong, especially with silver cheap, below $20.

About the Author: Mike Fuljenz
Mike Fuljenz is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of the NLG award-winning Michael Fuljenz Metals Market Weekly Report. Discover more by Clicking Here Now.

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MikeFuljenz
The rumors of silver’s demise are exaggerated. Industrial demand for solar panels and other applications should increase, while investment demand should remain strong, especially with silver cheap, below $20.
silver, precious metal, price, record high
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2014-11-02
Friday, 02 May 2014 06:11 PM
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