Silver Slips to 90-Day Low: What's the Outlook For the Rest Of 2016?
New York (Oct 6) Futures traders are wondering what is up with silver prices this week, which slid down below $18 per-ounce, the lowest prices since late June, 2016 - right after the June 23rd Brexit vote.
Analysts are calling it the largest one- and two-day price decline in silver since January 2015.
Silver futures for November and December of 2016, and January and February, 2017, are in decline this week, hovering between $17.70 and $17.90. Traders are seeing especially high volume in December contracts, as COMEX silver settlements slid 98 cents (minus 5.2%), to $17.885 per ounce.
Silver ETFs also took it on the chin this week, with the benchmark iShares Silver Trust (SLV) falling 5%, and the Global X Silver Miners plummeting 9.1% - its worst one-day performance since November 2014.
Lack of demand has become a key issue as silver prices waned after a strong start to 2016.
According to Thomson Reuters GFMS, U.S.-based retail sales volumes for gold and silver bars declined up to 50% in the third quarter of 2016. Another reason - both gold and silver, which don't pay interest rates to investors, are adversely impacted when central banks start floating trial balloons about rising higher interest rates, as the Federal Reserve is doing these days.
Precious metals experts contacted by TheStreet.com say the decline should be temporary, with the Fed's rate hike saber-rattling not convincing investors that anything will happen until December, 2016.
"Silver prices at the end of the year should be in the $22.00 dollar range," says Charles Thorngren, chief executive officer at Noble Gold Investments, in Pasadena, Calif. Thorngren says that with the Fed's constant misdirection on rates, the markets are left without any defining catalyst for strong sustained increases. "With that said, the Fed has no choice but to maintain their current vocal policy of increases, while actually doing nothing because of the election," he offers. "The Fed will not be drawn into the political battle now raging in the public's eyes, as well as behind the scenes in Washington."