Gold News

Silver Price Gains as Gold Falls, Investor Sentiment "Not a Drag" But ETF Holdings Drop

SILVER PRICES outperformed gold in quiet Asian and London trade Monday, rising from last week's finish despite continued outflows of metal from exchange traded ETF trust funds.
 
Touching $16.26 per ounce, silver added 1.1% as gold slipped below $1195.
 
Major Eurozone stock markets fell – and Athens lost 5.3% – after the Greek government called a snap election following the failure of MPs to appoint a new president.
 
German, UK and US Treasury bond prices rose on what Bloomberg called a "safe haven bid", pushing yields lower.
 
Latest data meantime showed the quantity of bullion held to back shares in the giant SPDR Gold Trust (NYSEArca:GLD) at 712 tonnes, the smallest holdings since 22 September 2008 – one week after the collapse of Lehman Brothers.
 
"We would imagine that most investors who bought gold as a hedge against disaster during the global economic crisis, or on the basis of easy leverage, have [already] exited this trade," says a note on gold ETF holdings from Japanese trading house Mitsui.
 
"It will be interesting to see how holdings change in 2015. We currently expect mild declines in metal holdings."
 
Over in silver last week, bullion holdings for the iShares SLV trust fell to their lowest level since September, down to 10,216 tonnes – nearly 6% below start-October's 3.5-year high.
 
Below $16 per ounce, says a technical analysis from London market makers and LBMA Silver Price participants Scotia Mocatta, "we see support at the 15.54 level – the 61.8% retracement of the December rally.
 
"A break below this support level opens up the possibility of a move down to the December 1st low of $14.42" – silver's lowest price since August 2009.
 
But looking ahead to 2015, "On balance we feel there is considerable more upside than downside potential," says a separate Scotia report on silver prices. 
 
"For 2015, we would look for silver to spend most of the time in the $16 to $22 range."
 
"Seasonal factors could also be positive for silver in the next few months," adds Mitsui analyst David Jollie, noting that – since the start of 2000 – "silver has generally shown price strength in the first quarter of the year."
 
However, even with silver prices repeating January and February's recent average gains of 5% and 6% respectively in 2016, "this would most likely leave the metal below $20 an ounce, suggesting that any expectations of price strength should be limited in scope."
 
This month already the US Mint has reported selling a record full-year quantity of American Eagle silver coins, beating 2013's record 42.7 million ounces with over 44moz sold by 8th December.
 
"Sentiment is not a drag on this metal," says Mitsui's Jollie, "but it is hard to see investor interest driving prices sharply higher in the absence of external stimuli."

Adrian Ash is director of research at BullionVault, the world-leading physical gold, silver and platinum market for private investors online. Formerly head of editorial at London's top publisher of private-investment advice, he was City correspondent for The Daily Reckoning from 2003 to 2008, and he has now been researching and writing daily analysis of precious metals and the wider financial markets for over 20 years. A frequent guest on BBC radio and television, Adrian is regularly quoted by the Financial Times, MarketWatch and many other respected news outlets, and his views from inside the bullion market have been sought by the Economist magazine, CNBC, Bloomberg, Germany's Handelsblatt and FAZ, plus Italy's Il Sole 24 Ore.

See the full archive of Adrian Ash articles on GoldNews.

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn

 

 

Market Fundamentals