Silver prices should move higher in 2014 according to silver pundits

San Francisco (Dec 25)   Investment demand will remain a key factor for the silver market in 2014, as there will likely be little slowdown in buyers’ appetite for the metal.

Industrial demand should pick up as the global economy grows, particularly in the U.S., although how much this will affect silver is up for debate. However, continued growth in mine supply and a lackluster outlook for gold will keep silver tethered.

Most bank analysts see average silver prices rising next year, with a range of $19 to $23.

Soft industrial demand, which accounts for half of silver’s usage, contributed to the weak silver prices, the bank said, citing research by Thomson Reuters GFMS

Low prices didn’t stop investors from keeping silver in their portfolios. The largest silver exchange-traded fund, Silver Trust (SLV), as of Dec. 17 has 10,139.78 metric tons of silver, slightly more than what it had to start the year, 10,084.96 tons, and not far off the high set on Jan 16 of 10,734.99. By contrast, holdings in the largest gold ETF, the SPDR Gold Shares (GLD) are down nearly 40%.

Silver prices fell after the news of the Fed’s tapering decision. While the news wasn’t a surprise, the timing was, market watchers said.

Sanchez said despite the weakness in silver, he believes the market is close to strong support and doesn’t see a price rout. When silver has fallen under the $19, it has been met by buying interest, and he expects more of the same in 2014. CPM Group has silver trading in a range of $18 to $25, with an average price of $21.

Morgan said he doesn’t have an average price forecast, but he said he expects that silver will return to the $30 to $34 area at some point in 2014 and recoup the earlier gains from this year. Silver’s high was $32.409, set in January. Silver may get some further investment interest if equities fall. Given the outsized gains in the stock market, it’s due for a correction and money flows will likely go to asset classes that are undervalued. That could mean silver and gold.