silver bullion

Silver Eyes Rebound in Q3

July 20th, 2017 by

There hasn’t been a great deal to report about the silver market this summer—at least nothing new. The precious metal has experienced price fluctuations throughout 2017 to be sure, but nothing suggestive of a clear direction for the market over the longer term.

Despite its recent rally, silver’s weak performance earlier this summer leaves its prospects for the rest of 2017 fairly uncertain.

Rough Quarter

So far this year, silver has definitely proven the maxim about it being more volatile than the rest of the precious metals. It has traded as high as $18.50 per ounce more than once this year, but it has also tumbled below $16/oz more recently. The chart below gives a quick glance at the metal’s performance over the past six months.

silver-price-6mo

The penchant for volatility has continued to hold up: After a better performance than the other metals early in year, silver was the worst-performing precious metal during the second quarter. In fact, at one point this summer, it even dipped into the red ink for the calendar year.

metals YTD performance

Image courtesy of Reuters

The chart above is slightly outdated, but gives a general idea of how the precious metals have done so far this year. For instance, palladium is still far ahead of the pack with a return of over 25% year-to-date. By contrast, even silver’s recent rally back above $16/oz has put the argent metal just barely into positive territory, up 1.36% for the year.

It’s interesting that silver prices have been pulled in both directions this year in the constant tug-of-war between the supply and demand sides of the equation. On the one hand, higher prices ought to be supported by data showing global silver mine production saw its first annual decline in nearly 15 years, all while more and more silver is allocated to industrial applications rather than retail or investment purposes.

silver bullion

©: alexis84 / 123RF Stock Photo

Nonetheless, Coin World reported this month that the precious metal’s weak performance during the summer prompted a group of market analysts and traders polled by Reuters to scale back their end-of-year forecasts for the silver price. (It’s worth noting that the median forecasts did call for silver to exceed $17/oz by year’s end, even after these predictions were revised lower.) Despite developments on the supply side, demand for silver coins has been far weaker in 2017 than in the previous five years or so. This has certainly acted to suppress silver prices, but is equally likely to portend a rebound in the second half of the year as it is a harbinger of continued weakness. As the interest-rate environment becomes clearer as the year progresses, we’ll be watching silver’s performance during the third quarter closely for clues.

 

The opinions and forecasts herein are provided solely for informational purposes, and should not be used or construed as an offer, solicitation, or recommendation to buy or sell any product.