Silver Price Gains as Gold Falls, Investor Sentiment "Not a Drag" But ETF Holdings Drop
Monday, 12/29/2014 14:03
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."
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