Tags: BCA Research | silver | short | outlook

BCA Research: Investors Should Be ‘Tactically Short Silver’

By    |   Friday, 12 April 2013 09:25 AM

The silver bubble began to burst in 2011 and exchange-traded fund (ETF) liquidation could be on the horizon, according to a very bearish note from BCA Research.

The Montreal-based research firm, which is widely followed by banks and other institutional investors, advised against bottom fishing in the metal despite its recent declines.

Instead, investors should be “tactically short silver.”

Forbes Columnist:
‘Who the Hell Cleared This?’

The firm cited four reasons for its gloomy silver outlook: industrial demand that is insufficient to stop liquidation of silver-oriented ETFs in the near term, diminished solar demand, increased mine supply and slack Chinese imports of the metal.

ETF holdings represent about 60 percent of the metal’s annual supply, BCA noted.

Silver prices are down about 22 percent from their 2012 highs. They key test will be technical support at $26 per ounce, the firm predicted.

“We cannot completely rule out disorderly liquidation by stale longs should this level give way.”

The Dubai Chronicle, meanwhile, had an opposing viewpoint on silver. It reported a major driver for silver prices is the new $1.4 trillion Japanese stimulus plan.

“The widespread perception is that Bank of Japan’s monetary program will spark growing global currency war. The white metal price is expected to jump as nations struggle to counter the Japanese move.”

Since silver is priced in U.S. dollars, when the greenback weakens the metal becomes less expensive for investors who hold non-dollar currencies, the Chronicle explained.

Traditionally, silver and gold prices have a high correlation to one another.

Deutsche Bank this week cut its outlook on gold prices for this year and next, citing mounting headwinds from a strengthening dollar, improving U.S. growth and an increasing appetite for equities over commodities, MarketWatch reported.

The bank reduced its 2013 average gold forecast by 11.8 percent to $1,637 a troy ounce, and cut its 2014 forecast 4.7 percent to $1,810/oz.

Deutsche Bank also slashed its forecasts on silver prices for this year and next, reducing its 2013 forecast by 16.5 percent to $31 an ounce and its 2014 outlook by 10.1 percent to $34 an ounce.

Forbes Columnist: ‘Who the Hell Cleared This?’

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The silver bubble began to burst in 2011 and exchange-traded fund (ETF) liquidation could be on the horizon, according to a very bearish note from BCA Research.
BCA Research,silver,short,outlook
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2013-25-12
Friday, 12 April 2013 09:25 AM
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