Trade see glum prospects for a near-term silver rally, volatility dissuades investors

02 Dec 2013 Last updated at 07:23:54 GMT
 
MUMBAI (Scrap Monster) : The Silver prices which hit the peak of $50 per Oz in April 2011 has more than halved since then.  This year, ‘poor man’s gold’ witnessed even more drastic fall than its dearer counterpart. The trade maintains a gloomy near-term outlook. The long-term outlook too  doesn’t look encouraging, considering the extreme volatility that silver has witnessed during the past.

A group of Citi analysts believe that the increased investor interest in white metal is not enough to overcome weak supply and demand fundamentals. They predict further decline in Silver prices during the remaining quarters of the current financial year. The financial services firm is not upbeat on the strong demand pick up in silver ETF demand either. Citi doesn’t recommend Silver as an investment idea for rest of the year.

Also, CPM Group in its report on Silver’s long-term outlook predicted consolidation of silver prices for another three years. The firm sees revival in investor interest and pick-up in industrial demand to resume only by 2016. The declining trend is likely to persist in the medium term.

The Silver prices shot up by more than 150% in 2011 to touch a 30-year high, but later plunged by nearly 35% in just under a fortnight. Many long-term investors are seen staying away from investing in the commodity, due to this extreme volatility in prices.

Author: Paul Ploumis