The Silver Edition: A discussion about the future of Silver Prices, Bullion, ETFs, Supply & Demand ▸ Commodities Confidential w/ CPM Group
We're talking all things silver: prices, ETFs, bullion & coins, the surplus market, and what the debt ceiling may have in store for the silver market.
CPM Group's Mu Li joins us to explain this and more on the first silver-edition of "Commodities Confidential". Beginning w/ the January spike in silver ETF holdings-- Li confirms that by mid-January, there was a 20M ounce increase in silver ETF holdings.
According to Li, this is indicative of the investor positiveness over silver and the precious metals complex that they've seen thus far in Jan. 2013; although this also coincides with the bullish sentiment they're seeing in stocks and other risk assets, Li notes that it only amounts to $620M in terms of asset allocation, a minuscule fraction of the capital that has been allocated to risk assets during this recent spike.
Regarding the reported silver surplus of 207M ounces, Li confirms that although silver is still in a surplus market, investors have typically been absorbing the surplus metal in the silver market. Continuing with the subject of supply and demand, the surplus would seem to suggest that silver is less sensitive to these issues; Mu explains, however, that because silver is mined as a byproduct of lead, zinc and copper production, silver supply is actually highly sensitive to base metals prices; in turn, higher silver prices stimulate base metal mine development, feeding the supply-demand relationship.
Furthermore, although primary silver mines are accounting for growing percentage of total silver mine supply, up 5% from last year, they still only account for roughly a quarter of total silver mine supply. Mu Li continues to cover all other aspects of the silver market, including the possible silver bullion coin shortage following the U.S. Mint's halting of Silver Eagle sales, and what may be in store for the silver market given the looming debt ceiling and on-going fiscal cliff issues. Kitco News, January 25, 2013.