GFMS Limited of London, in
their monthly ''Precious Metals Market Outlook'' report, released March 4th:
''Silver once again has been the star performer over the past few weeks, with
the price posting an almost straight line rally to a fresh 31-year high of over
$34 in early March. In addition, what made silver's gains even more impressive
was its massive outperformance of other industrial metals, such as copper, which
saw a hefty fall in late February. Key to this was renewed investor interest
for precious metals as safe haven assets, on the back of increasing geopolitical
tension, coupled with rising inflationary fears. Furthermore, given silver's
low costs and wide trading range, it has become increasingly popular among more
speculative investors. Indeed, even at $34/oz (at the time of writing), silver
is still way below its all-time high of $50 in 1980, which clearly has given an
additional boost to investor confidence in the white metal.
Looking ahead, the recent backwardation in the silver market and news regarding
difficulty of securing silver bullion in volume, including by the Royal Canadian
Mint, suggest that the metal could soon break out and move sharply higher.
Specifically, as gold is likely to approach $1,500, we would not be surprised to
see silver challenging $40 in the coming weeks. Nevertheless, due to its
historically high volatility, we would caution the potential downside for
silver, with the metal in our view probably falling to below $30 at its lowest
point in May, something very likely, given the growing pessimism regarding the
economic outlook.'' |
