Solid Silver Demand To Support Prices [iShares Silver Trust (ETF), SPDR Gold Trust (ETF)]

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May 23, 2014 10:32am NYSE:AGQ NYSE:GLD

silver barsDiane Alter: The silver price today moved solidly higher in morning trading following some positive economic data out of China.


July Comex silver traded up $0.392, or 1.26%, at $19.73, after the preliminary HSBC China manufacturing purchasing managers index (PMI) for May came in at 49.7. That was up from 48.1 in April, and was the best reading in five months.

The news stoked global stock markets and the overall raw commodity sector, as China is the world’s largest consumer of raw commodities. The Asian nation is also the world’s second-largest economy.

Meanwhile, data showing a slowdown for manufacturers across the Eurozone region strengthened the case for the European Central Bank to loosen monetary policies at its next meeting in Frankfurt, Germany, on June 5.

“The China manufacturing data is good news, Jacques Porta, who helps oversee $780 million at Ofi Gestion Privee in Paris, told Bloomberg. “It will have a positive impact on Europe, especially on mining stocks. The bad-euro-area PMI data could add to signs that the ECB will be obliged to intervene soon. The downside risk to stocks is that the ECB doesn’t act in June.”

Downside risks for silver will likely be limited over the next two days. Indeed, silver prices could actually see some positive momentum heading into the weekend.

Tensions have risen ahead of Sunday’s presidential election in Ukraine. Eight soldiers were killed in fighting, and several others hurt Thursday, at an army checkpoint when dozens of gunman tried to enter Ukraine from Russia.

Sunday’s election is aimed at stabilizing Ukraine after mass street protests toppled Moscow-backed President Viktor Yanukovich in February. Separatists, however, pledge to prevent the voting from going ahead in eastern towns where they have taken control.

The United States and the European Union warn they will impose broad sanctions on Russia, which annexed Ukraine’s Crimea peninsula in March after Yanukovich’s ouster, if it attempts to derail the election.

Demand for safe-haven silver has shown signs of life during the last several Friday sessions amid simmering conflicts overseas.

In fact, worldwide demand for silver continues to remain robust after hitting an all-time high last year.

Solid Silver Demand to Support Prices

A slump in silver prices in 2013 left the white metal much more affordable and buoyed a wave of buying among opportunistic investors.

As silver prices plunged a painful 36% last year, global sales of silver coins and bars surged some 76%, data from last week’s World Silver Survey 2014 showed.

“Despite persistently low silver prices, demand for physical silver witnessed an all-time high in 2013,” Money Morning Global Resources Specialist Peter Krauth explained. “Demand rose by 13% to a record 1.081 billion ounces, according to the World Silver Survey 2014 prepared by the Silver Institute.”

And, with silver prices nearly flat year to date, early signs suggest another solid year for silver demand.

Sales of the popular American Silver Eagle coins hit 4,590,500 in April, up 12.3% from the 4,087,000 sold in the same month a year earlier. It was the sixth-highest monthly sales total and the best April ever.

Plus, the Mint sold 5,354,000 American Silver Eagles in March, marking its fourth-biggest sales month ever. Sales in March 2104 were a whopping 59.5% more than sold in March 2013.

Meanwhile, the Perth Mint in Australia reports sales of its one-ounce silver crocodile coin are being “snapped” up. Some 300,000 sold over a week’s time. The Perth Mint expects the 1 million minted croc coins to sell out in a month or two.

As global demand for silver has become so frenzied, a Singapore retail supplier of coins and bars recently opened a new 600-metric-ton vault. It was the second sizable silver storage facility to be built in the Asian region in less than six months, and more are expected.

Silver will continue to be a popular investment for the same reasons it has always been a favored alternative asset: irresponsible government spending, over-accommodating global central banks, inflation jitters, and always simmering (somewhere) geopolitical tensions.

As such, silver prices are poised to rise…

“As market forces begin to reassert themselves, and they will, look for silver prices to rise in tandem,” Krauth says. “All the fundamental drivers for much higher silver prices are still intact, so now is a great time to position yourself for higher silver.”

Money MorningWritten By Diane Alter From Money Morning

We’re in the midst of the greatest investing boom in almost 60 years. And rest assured – this boom is not about to end anytime soon. You see, the flattening of the world continues to spawn new markets worth trillions of dollars; new customers that measure in the billions; an insatiable global demand for basic resources that’s growing exponentially; and a technological revolution even in the most distant markets on the planet.And Money Morning is here to help investors profit handsomely on this seismic shift in the global economy. In fact, we believe this is where the only real fortunes will be made in the months and years to come.


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