http://illuminatisilver.comWhat will happen to Silver Prices by the end of 2018 (Part 2)
Today is Monday 6th August 2018 and this is the second part of 2 videos where we highlight what we believe will be the influences on the Silver price for the remainder of 2018 and where we assess prices will end up before the year ends.
In our last video we highlighted the potential effects on silver prices which included:
1. Geopolitical issues
2. Interest rates
3. Price manipulation
4. Traditional Supply and Demand.
5. Internal US Politics.
We also pointed out that so far this year with silver standing at $15.42 an ounce it is some 8% down on exactly a year ago and down some 9.5% or $1.64 down since the start of 2018.
So Are silver prices going to go up in 2018?
Well before we directly answer that, we wish to draw your attention to a poll conducted by Focus Economics whose panellists could see prices increasing in 2018, but not by a lot.
As a whole, they expect prices to average $17.50 this year, which is higher than the metal’s current level but still far from what silver investors have been hoping and waiting for. Here’s a list of the average 2018 silver predictions given by some of the respondents:
Capital Economics — $16.30 per ounce
CIBC — $18.10 per ounce
Deutsche Bank— $17.60 per ounce
JPMorgan — $18.70 per ounce
RBC Capital Markets — $19.40 per ounce
Standard Chartered — $18.90 per ounce
Many industry insiders predict that silver will stay the course for the third quarter this year, eventually beginning its slow climb as markets enter into the fourth quarter.
Analysts at Scotiabank recently stated that, “going forward, we expect that recuperating physical bar demand and rising industrial consumption will help tighten markets and push speculators, who remain net short silver, out of the market”… And that “silver prices are expected to average US$18 per ounce this year and rise to US$19 per ounce in 2019 on the dual precious/industrial nature of its demand base.”
The most bullish forecast for the quarter comes from both Société Générale and ANZ which are calling for a price of US $18.80; meanwhile, ABN AMRO is the most bearish with a forecast of US$16.00.
So accepting we have no crystal ball our analysis shows that silver at $15.50 is sustainable in terms of quantities being mined especially when compared with most of the major producers declaring an average AISC of production of around $11.50/ounce in 2017
Fortuna Silver Mines, a pretty large player in the silver space, have pretty low AISC’s at $8/ounce. It is a profitable company and has a large cash balance.
With approximately 30% of silver being produced or mined by pure silver mines (which tend to have the higher AISC’s and 70% mined as a by-product of some other precious metal e.g. gold (which tend to have lower AISC for silver extraction), we can see that there is very limited pressure for these mines with one or two exceptions to raise their prices against a backdrop of silver even at $15.50 an ounce.
On pure supply and demand terms where we continue to assume that 60% of demand remains for Industrial purposes we see no reason why silver should not be able to vacillate between a low of $14.50 an ounce and $16.50 an ounce.
However, bearing in mind the other factors which can affect price, it would not take a great deal of turmoil either for example by a military incursion, trade tariffs proving damning or a major upset within the Trump administration to see the dollar value falling, stock markets taking a correction and monies flow from equities and currencies into gold and silver. In that scenario we could very well see silver reach $18 - $19 again before the year is out.
If we were asked to take a punt today, and with our view that the economy will continue to move positively forward a while longer, we feel that the FED will again raise interest rates, and the stock markets will rise further thereby pressurising silver prices downwards.
However like many of the people we have mentioned we do see this reversing towards the final quarter of this year which is only a couple of months away. So we are of the opinion that silver will rest at or around the $16.50 - $17 level by December end having fallen no lower than $14 and risen no higher than $18 in between, even allowing for the US elections in November.
Are silver prices going up this year? What do you think? What key indicators do you look for? Do share your thoughts here we shall be happy to obtain your perspective.
Please view our latest videos:
What will happen to Silver Prices by the end of 2018 (Part 1 of 2)
https://youtu.be/6DN-0Jbrhv8Gold and Silver weekly Update – w/e 3rd August 2018
https://youtu.be/XC79CfLVyIYGold falls below $1250 and silver below $16
https://youtu.be/L5CmhoSDV50Copper – Its History and Prospects as an Investment Opportunity in 2018
https://youtu.be/JsIHjG3t7vQGold falls below $1300 – will it fall further?
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