Gold News

China Slowdown "Dampening Silver Price" After Solar Default Despite Crimea Speculation

SILVER PRICES rose sharply late Friday, adding 2.25% for the week to Comex May silver after the London Fix came in at $21.36 per ounce – two cents lower than the previous Friday.
Still 3% lower than the high for the year above $22 per ounce achieved on February 25th, the silver price on May futures contracts – the most active month – settled at $21.413.
Although the political situation in Ukraine was seen by some analysts driving gold higher, and silver prices with it, China's weakening economy threatens the rally say others.
Ahead of Crimea's vote on splitting from Ukraine to join Russia this weekend, the iShares Silver Trust – which enables investors to "track" the silver price without owning metal – saw its holdings of metal, needed to back the value of its shares, unchanged from the week before at 10,164.47 tonnes.
Increasing a little over 1% increase since New Year, that amount equates to around 40% of annual silver mine supply worldwide.
The US Mint meantime reported their sales for March so far of Silver Eagle coins at 2.3 million ounces. Last March 2013 total sales were 3.4m.
Speculative traders in US futures have nearly doubled their bullish position on silver prices so far this year, according to the CFTC regulator's weekly Commitment of Traders report.
But open interest – the number of active contracts – fell 3.3% last week to 142,068, a drop from the recent high of activity on February 26th of 4.5%.
Silver prices are likely to trade in a range between $17.75 and $22.75 for the rest of 2014, bullion bank HSBC wrote in a new report, as the global silver surplus widens.
HSBC's analysts see the excess of silver bullion supplies over this year's demand growing to around 156 million ounces (4,800 tonnes) – around 15% of annual offtake.
Modest silver investment demand, plus steady demand from jewelry consumers, will be offset by strong supply, HSBC says.
China's poor run of data "appears to have had a negative effect upon silver," says French investment and bullion bank Natixis.
"The price of the metal [then] dropped by 2% after news of the default emerged" of Shanghai Chaori Solar Energy Science & Technology, a small solar panel company, which failed to make bond interest payments two weeks ago.
Silver paste is used in the production of solar panels. The photo-voltaic industry's silver demand consumed about 35 million ounces (1,088 tonnes) in 2013, around 8% of all industrial silver use.
China's silver imports, reckons Citigroup, are projected to fall further in 2014 thanks to a cut in "uneconomic" solar panel production capacity.
Government subsidies to the solar industry will be cut substantially, the Citigroup analysts said, removing a spur to growth.

Vice president of business development for BullionVault from 2012 to 2014, Miguel Perez-Santalla is a fierce advocate for retail investors, and a regular speaker at industry and media events. With over 30 years' experience in the precious metals business, Miguel has worked at the United States' top coin dealerships, as well as international refining group Heraeus.

See the full archive of Miguel Perez-Santalla articles.

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