Silver may outperform Gold by late 2017 or early 2018

UNITED STATES April 13 2017 4:31 PM

NEW YORK (Scrap Register): Metals Focus looks for silver to outperform gold late this year or early next year, although the metal could undergo a downward correction first. 

According to Metals Focus, gold has been the main beneficiary of geopolitical worries, such as the U.S. airstrike on Syria. With real interest rates remaining low around the globe, investors are likely to favor silver as they look for yield.

Meanwhile, a potential correction in U.S. equities is likely to mean a rotation into precious metals. Overall, signs have already emerged this year of the growth in speculative interest in the silver market.

However, the consultancy said a build in gross long positions in the futures market means silver could be vulnerable to a correction in the near term.

Further, the likelihood of disappointment in Trump’s economic policies should also lead to a sell-off in industrial commodities, including silver. This could potentially see the gold:silver ratio jump (meaning gold outperformance). 

However, Metals Focus believes the impact will be temporary. Furthermore, looking ahead to late 2017/early 2018, silver is likely to ultimately benefit from increased investor inflows. 

This, together with silver’s smaller market, should see the price eventually outperform gold, which in turn is likely to see the ratio break out to the downside from the current range, Metals Focus added.