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Silver May Outperform Gold in 2014
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Archive for January, 2014

Silver May Outperform Gold in 2014

Straightsilver.com, Miami Beach, FL – January 17, 2014

If 2013 was a bad year for gold, it was a great deal worse for silver. At the end of the year, the gold price crossed the finishing line down 28%, but the price for silver struggled morel. Starting at around $30.00 an oz. at the beginning of January, it limped home at $19.50 as 2013 came to a close – with a loss of 36%. Yet, many gurus are predicting that the popularity of silver will bounce quicker than that of gold. A lot of this outcome is contingent on the future strength of the US business recovery as well as an increase in industrial demand. 

Silver to Benefit From Wider Demand

Improving prospects for both gold and silver are in the cards, in spite of a rough 2013. However the wide selection of buyers for silver make it a much more likely of the two to thrive in 2014. This is because of the fact that, whereas the primary source of demand for gold is as an investment in the shape of jewelry or coins, silver has many other further applications. Silver is utilized in assorted electronic gadgets like solar batteries, cell phones, circuit boards, and plasma TVs. These business uses account for almost 1/2 the requirement for silver.

Gold Costly Matched against Silver

Another account for silver’s favor is that the cost of gold is comparatively high compared with that of silver. In 2013, the proportion of gold to silver was roughly 52:1, meaning it took 52 ounces of silver to buy one oz of gold. Currently, the ratio stands about 62:1.

How Will the Economy Affect Silver

 

A strengthening US economy could help spark commercial demand for silver for the use of household goods both here and abroad. As people begin opening their wallets once again, we could see an uptick in rare metal costs all around.

Industrial silver

Nonetheless US industrial recovery would possibly not be all good news for silver. A stronger economy will provide more scope for the Fed Reserve to cut back on its purchasing of bonds. The purchasing of less bonds by the Fed Reserve will have a unfavorable effect on the price of valuable metals thanks to the likelihood of increased rates on bonds. Better returns from bonds increase the possibility price of holding silver and gold which in turn makes them less enticing for investors; however, the versatility of silver will help shore up its value.
On the other end of the scale, stagnant expansion in the USA job market and economy will also have its effects on rare metals. We saw this in early 2014 as silver costs lifted on the reports of a slightly less than expedient US job report. The price for silver went up by 2.6% on Friday following this revelation while the effect on the gold price was more muted with a rise of just 1.2%.
This would suggest the Fed might be slower to control its bond purchases than formerly anticipated. Backers are also taking heart in the more strong support for silver, which has stayed above the $19 mark.
All these factors point to a bigger potential for returns from silver than from gold. The heavier losses for silver in 2013 set the scene for a larger bounce in 2014. If the market turns sour, losses may probably be cushioned by buoyant industrial demand and investor support. A stagnant economic recovery could also prove constructive for this flexible metal as financiers seek a protected haven from inflation. Gold might be a contender but silver could well be the stellar performer of 2014.

Will Silver Rise in 2014? Here are some reasons why there’s building confidence the white metal is ready to make a move

 

Straightsilver.com, Miami Beach, FL – January 16, 2014

Many analysts see Silver selling at a minimum of $21 per ounce in 2014.  However, there are some silver bugs that have a more aggressive outlook for Silver and think that this year 2014 may bring increased strength in the silver market that will result in a strong price increase. Let’s take a look at four major factors that could influence silver and support the price move in 2014.

1. Production Costs

During the time period of July through September 2013, the costs to extract silver from the ground had a average cost basis of $21.39 per ounce,  The mining costs at those levels are above the price that silver is trading for right now. Silver settled in around $20.26 per ounce at yesterday’s close.

2. The United States Economy

The US Federal Reserve decided to reduce its bond-buying program at the end of 2013. The central bank plans is to lower it by $10 billion, to $75 billion a month starting this month. Historically, this tactic can result in a weakening of the US dollar. This result is positive for precious metals such as Silver and Gold. The reduction is based on a improving economy which could result in a increase industrial demand for the Silver.

3. Potential Stock Market Pullback and re-allocation into Precious Metals as a Safe Haven trade

From a technical standpoint, many traders believe that Silver is in an oversold position similar to 2001 and 2008. These types of set ups can be followed by strong movements to the up-side.and that’s bullish to buy Silver now before the prices move higher again. This coupled with the fact that in 2013, the stock market saw substantial gains in the stock market and many are analysts are looking for a correction in 2014. If this happens, this is just another reason to use Precious Metals as a “safe haven” trade.

4. Asian silver demand

China and India are increasing their imports amounts of silver and gold. If demand from those locations continues at the same pace, silver prices could see a big spike to the upside.