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Actionable news in USLV: VELOCITYSHARESTM 3X LONG SILVER ETN LINKED TO THE S&P GSCIR SILVER INDEX ER,

7 Reasons To Invest In Silver Futures

Summary

Silver demand appears to be increasing.

Silver supply seems to be decreasing.

Chart patterns indicate a bull market.

Negative interest rates and political instability are potentially supportive of the silver price.

Gold/silver ratio is showing a possible break in pattern.

By: Eric Hale, VP of Macro Trading, Redcape Investments

Futures and options trading can result in profits and/or losses. Invest risk capital only.

The dynamics of silver as both a monetary and an industrial metal make the silver futures market one of the most interesting to follow. And now, September 2016 silver, which is trading at $20.04/oz, seems to present some of the fundamentals and the technicals that could work to propel it further into its bull market.

1. Supply: Although worldwide mine production reached a record high of 886.7 million ounces (Moz), there was an annual physical deficit for the third year in a row in 2015. The 129.8Moz shortfall was the third largest on record and was 60% larger than the 78.6Moz deficit in 2014. Scrap supply totaling 146.1Moz is the lowest amount since 1996 and is a 12.5% decrease in 2015 from 2014. In 2015, 56% of the 886.7Moz of silver produced came from copper, lead, and zinc mines as a secondary metal. As the prices of these industrial metals have fallen, production of these metals has decreased, which has caused a subsequent decrease in silver production. Bloomberg reports that Societe Generale expects silver supply to decrease 9.2% in 2016 from 2015 mainly due to cutbacks in base metals production.

2. Demand: In 2015, demand for silver increased 3% from 2014 to 1.17 billion ounces (Boz). In 2015, with silver prices at multiyear lows, investors sensibly increased purchases of coins and bars by 24% from 2014 to 292.3Moz. This overwhelming demand caused a...


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