2014 average silver price forecast to be down 20.1% on year: GFMS
London (Nov 19) The 2014 full-year average price of silver is forecast to drop 20.1% year on year at $19/oz from $23.79/oz in 2013, research firm GFMS said in a report late Tuesday, with mine supplies hitting all-time highs and demand easing.
Year-to-date average silver prices have fallen by almost 20% with the London Bullion Market Association Silver Price reaching a multi-year low November 6 of $15.28/oz before rebounding slightly, according to the GFMS/Thomson Reuters Interim Silver Market Review.
LBMA Silver fixed in London Tuesday at $16.27/oz.
The metal fixed January 2, the first fix of the year, at $19.94/oz.
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Total physical demand for silver is forecast to be 6.7% lower in 2014 after a weak first half for most silver-consuming sectors.
"In Europe a harmonization of sales tax rates in January 2014 saw silver become significantly more expensive for retail investors and led to lower sales until the recent price declines. Elsewhere modest declines have been seen in industrial (-1.8%), jewelry (-4.4%) and silverware (-6.3%) markets as thrifting away from silver remains an ongoing process," the report read.
On the mine side, production is forecast to reach all-time highs this year as supply from Guatemala, Mexico, Chile and Peru increases.
"This is forecast to see primary supply increase by 3.5% in 2014 to 868 million oz. Total supply to the market is expected to increase more modestly as scrap supply continues to contract, with an estimated 14% decline in scrap leading to total supply of 1.131 billion oz, a 2.9% increase on year," GFMS added.
Looking at the speculative business, Exchange Traded Fund holdings of silver have remained "remarkably robust at a time when some are questioning the rationale for holding non-yielding assets."
Having peaked at 660 million oz in late September 2014 they remained at 650 million oz as of mid-November, a year-to-date increase of 17 million oz or 3%, according to the analytics company's data.
"In comparison, at 1,682 mt, gold ETF holdings are over 1,000 mt lower than their peak level, and have fallen by another 129 mt, or 8%, year-to-date," GFMS/TR added.
On COMEX open interest in silver also remained at record levels, GFMS said.