Silver arguably the most volatile commodity being traded is expected to gain 18% and touch $33.04 oz in the fourth quarter of this year according to a Bloomberg Survey. Silver held in exchange traded products climbed for three months and is now valued at $16.3 billion Bloomberg data showed.
With industrial output contracting in USA for a second consecutive month in July and a weak Chinese factory data showing signs of slowdown in the second biggest economy of the world not to speak of Japanese contraction and Euro Area market contraction investors worldwide are clinging on to the white metal on hopes that stimulus measures are not far away .Silver being an industrial commodity finds 53% of its output getting consumed by the manufacturing sector.
No wonder a slowdown low growth figures are always a drag on silver prices. Since the beginning of the year it has reacted more like a base metal than a precious one said Frederique Dubrion the Geneva based president and chief investment officer of Blue Star Advisors SA to Bloomberg News. The main negatives are still in industry. We re waiting for more quantitative easing and that would be really positive.
The commodity is trading 44% below the 3 decade high of $49.845 that it touched in April 2011 it has averaged $30.38 since the start of January 2012. The two decade average is calculated at $9.97. Silver markets are in for a surplus according to data compiled by various agencies.
The 2012 surplus is estimated at around 3000 tons even as the next year surplus is pegged at about 4000 tons. But if the stimulus measures are announced there can be little doubt that silver would scale highs.
Now if the growth figures show a pickup which is deemed by IMF to touch 3.9% in global growth in 2013 compared to 3.5% in 2012 which is some good news silver could boom further. Industrial demand may remain weak at least for another six months said Jochen Hitzfeld from UniCredit SpA in Munich to Bloomberg.
This makes the gap that investors have to absorb even higher said the analyst who anticipates a fourth quarter average of $28. Meanwhile in India silver futures are expected to trade bullish for the week: At MCX strong support is seen at 52800 and resistance likely to be at 54000. MCX Silver September contract is expected to maintian upswing. Expected trading range is 52500 54500. said Amrita Mashar Manager Research Commodity Online .
