Salient to Investors:

  • Silver ETP holdings are near October’s record while money managers reduced bullish wagers by 95% – Coeur Mining has hedged a third of its production through Q1 2015.
  • Retail investors account for 80% of US ETP purchases and expect long-term growth to spur industrial demand from solar panels to electronics.
  • Michael Cuggino at Permanent Portfolio Family of Funds said the rise in the dollar has hammered commodities, including silver, and the funds and several investors are selling, while long-term investors are holding on it as a store of value and as a significant metal to the economy and monetary policy.
  • Peter Jankovskis at OakBrook Investments said, unlike gold, buyers of silver ETFs are not momentum players and will hold it much longer than gold – in 2013 ETF investors did not flee like they did with gold ETFs. Jankovskis does not see many wanting to buy precious metals, and the fundamentals of supply/demand are against silver because supplies are abundant.
  • Silver’s 60-day historical volatility is the lowest since June 2003, while gold’s is the lowest in almost 4 years. Silver’s 30-week correlation coefficient to gold is at 0.82 and to an index of industrial metals is at 0.27.
  • Mark O’Byrne at GoldCore said sentiment remains bad in the silver market, but buyers see silver as undervalued versus gold because they worry about recession but expect industrial demand to stay robust.
  • The median analyst expects silver will averaging $20 in Q4 and $20.40 in 2015.
  • Mike McGlone at ETF Securities said retail buyers are holding silver because they expect increased demand will boost prices.
  • Michael Haynes at American Precious Metals Exchange said silver’s appeal has increased relative to other precious metals. An ounce of gold buys 66 ounces of silver versus the 10-yr average of 57.7 ounces.
  • CPM said industrial demand will rise this year, with the most ever being used in solar panels. 50% of silver goes to industrial items, versus 10% for gold.  CPM said demand will continue to trail supplies for 9 straight years.
  • Randy Smallwood at Silver Wheaton said demand is growing for silver used in high-efficiency electronics and anti-bacteria applications.

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