ETP Data Shows Silver Lining for Grey Metal

August 7, 2013 at 18:43


Precious metal bugs will be disappointed to note gold has once gain dropped below the $1,300 level.

As some see less Federal Reserve largesse on the horizon – supposedly removing an important support for bullion – so holdings in gold exchange-traded products have fallen 26 per cent in 2013.

Silver has tracked gold lower and sits beneath $20 an ounce, hovering precariously over apparent support at about $18.

Gold’s price relative to silver, known as the Mint ratio, is near a three-year high of 66.

Yet, as the chart below shows, holdings in silver ETPs have held up well.

Now some analysts are saying that this suggests the grey metal may be poised to, if not fully dislocate from gold, then at least to outperform.

The Mint ratio could fall as investors start rewarding silver for the perceived improvements in the global economy. HSBC forecasts industrial demand for silver will rise an average of about 3.5 per cent this year and next.

Meanwhile, the lower price has caused miners to cut production. A bullish mix.