UNITED STATES June 21 2017 1:13 PM
NEW YORK (Scrap Register): United States retail silver-investment demand is headed for a drop in 2017, said the consultancy Metals Focus.
Analysts noted that U.S. silver coin and bar demand fell 18% last year. One factor is range-bound prices, with many dealers suggesting that a decline to around $14 to $15 would attract retail investors.
This scenario had occurred as recently as 2015, which saw weak demand over the first five months quickly replaced by a steep upturn in silver coin and bar sales in the U.S.
However, the consultancy adds that the market has become saturated, with a combined 560 million ounces (17,400 tons) of silver coins and bars purchased by U.S. retail investors between 2011 and 2015, an average of some 113 million ounces (3,500 tons) per annum.
By any standard, this is an impressive performance, but at the same time raises the question as to whether a similar pace can be maintained going forward, Metals Focus added.
Analysts also suggested the Trump presidency could be reducing demand, since a “mistrust of the previous administration in some areas of the country appears to have contributed to elevated demand for guns and silver. Conversely, since late November, gun sales have fallen back.
Analysts added that many silver holders have also sold their metal back into the secondary market. Taken together, these factors help explain the weakness in retail investor demand so far in 2017.
“For the year as a whole, our expectation calls for a 20% y/y decline, to an estimated 78Moz (2,432t); this would comfortably be the lowest level this decade,” Metals Focus noted.