First silver supply drop in 15 years won’t match fall in demand…

SILVER SUPPLY is expected to fall this year, but it won’t fall as hard as demand, according to a new report by a leading precious metals consultancy, writes Steffen Grosshauser at BullionVault.

This will widen the metal’s “major surplus” say London-based analysts Metals Focus. Yet it expects silver prices will rise for a second year running thanks to strong buying by institutional investors.

“The weak US rate outlook is the bedrock for a rally in precious metal prices,” said Neil Meader, research & consultancy manager, launching the group’s new Silver Focus 2017 at an event last week near London Bridge in the City financial district.

Furthermore, a possible correction in equities and “capped upside” for the US Dollar against other major currencies ā€“ thanks in part to an improved situation in the Eurozone ā€“ could also support silver prices, together with numerous global political risks.

So despite silver’s decreasing demand and a “large and growing” surplus of supply, the annual average price could rise 7% to $18.30 per ounce across 2017 reckons Metals Focus, mainly driven by inflows to silver exchange-traded products (ETFs such as the iShares Silver Trust (NYSEArca:SLV)) and demand from institutional investors.

Should silver manage to rise in price for the second year in a row, Meader went on, the trend for institutional investment could “snowball”, attracting “momentum traders” to buy the precious metal and push prices higher again despite the fundamental excess of total supply over demand.

Read the full story on BullionVault.