SMM10 March 27: at the 2020 China International Silver Industry chain Summit Forum and China Silver Market Application Symposium, Xue Na, a senior analyst of precious metals in South China Futures, delivered a keynote speech on "where is the Silver Road approaching the US election-Silver Market trend and Price Analysis".
Supply and demand of Silver and its Commodity attribute
Xue Na said that from the historical data, the correlation between silver price and fundamentals is not high. At the same time, silver exchange inventories are near their highest level since the 1970s, but silver prices have not fallen to their lowest level in 70 years.
In addition, the production cost of silver is very low, with a cash cost of US $7.1 / oz in 2019 (sample size accounts for about 72%). The primary silver accounts for 23% of the total supply of the mine, and the associated silver is generally used as a by-product.
Investment demand of Silver and Gold
Xue Na pointed out that the trading volume of gold and silver rights is much larger than that of physical gold and silver, and there is a high correlation between ETF positions and gold prices in the long run.
However, as far as silver is concerned, the substantial increase in silver ETF positions is also one of the recent price drivers. In the long run, the correlation between silver ETF positions and prices is not high.
However, from the historical data, we can find that silver has a strong correlation with CRB index and gold. The correlation coefficient between silver spot and CRB comprehensive spot weekly closing price is 0.90 since 2000, and that between silver spot and gold weekly closing price since 2000 is 0.88. In addition, the silver trend is also related to the economic cycle of China and the United States, especially to China.
How will the US election affect silver?
Xue Na believes that the monetary, fiscal and diplomatic policies of the United States have a greater impact on gold and silver. In the near future, the focus will be on the presidential and conference elections in the United States on November 3.
Prospects for the future of Baiyin
At present, macro risk events occur frequently, and there are many factors that affect the trend of silver price. Outbreaks are still under way in the United States and Europe. And the law of the gold-silver ratio has changed greatly, and the recent trend has fluctuated violently, so we can no longer arbitrage with the previous law. At the same time, the RMB exchange rate also has a certain impact on domestic gold and silver.
