Silver Market Update (5-17-2015)

If you’ve been hanging on to your supply of silver and trusting that the price will rise back into a more sensible range, last week proved you spectacularly right. Silver had an exceptionally good week, rising strongly as soon as trading began on Monday and barely slowing down until Friday. By the time the markets closed for the weekend the spot price stood at $17.495. That’s a jump of $1.10 over the Friday before, an increase of close to 7 percent. In contrast with the previous week’s slightly erratic performance this was a much more solid climb and definitely cause for optimism. Is it the start of a steady upward trend? Only time will tell, but if nothing else it shows that silver retains enough investor confidence to push it through $17 and beyond. Barring any major shocks this week expect to see some support coming in at around that level; there’s no reason for the price to fall back below it.
While usually investors like to have some predictive tools to work from – for example, silver and other commodities will rise if equities fall – sometimes it’s nice to see silver performing strongly enough that it just ignores traditional patterns and rises anyway. That’s what happened last week; while the first couple of days of the period were marked by falls in both the Dow Jones and FTSE 100, silver kept climbing even when the Dow turned round on Thursday and Friday. At the same time oil prices haven’t moved much recently, with a barrel of WTI still hanging just below the $60 mark and Brent slightly higher at about $66.50. That should add some more support to silver, as such a sluggish market doesn’t offer a lot to tempt investors.
Market analysts have mixed opinions about how silver is going to perform for the rest of this year. There’s a group who believe it will average around $16.50, which is definitely on the pessimistic side – this is well below what we think is realistic. There are some more optimistic voices too, though. While the bulk of demand remains in coins and bars, other sectors are ramping up their purchases of silver. One of the most interesting is the solar power industry. Silver is a key component in photovoltaic panels, and the global market for these is rising rapidly. Most information suggests a 30 percent rise in installed solar generating capacity through the year, up to 57 gigawatts – China alone plans to add 17 gigawatts by the end of 2015. This year’s Paris conference on renewable energy could give the industry another enormous boost, especially in developing economies, so there’s a lot of potential for increased demand for silver. With no sign of any new supplies opening up that’s definitely good news for long-term investors.
So, for now, the picture is looking generally positive. The week’s gains put the spot price higher than it’s been since late January, and the prospect of future industrial demand makes a stock of silver a very attractive thing to have in your portfolio. With prices still well below what we think is a fair value this is a good time to buy.