In the context of the global economic downturn, the prices of various precious metals and base metals were refreshed in 2010. What will happen to gold, silver, platinum, palladium, copper and other metals in 2011? The Kitco news report will cover a series of reports on metal trends in the coming year and discuss what will happen in 2011. The discussion will include currency, stocks, and the global economy: 2011 precious metals wait-and-see (Kitco News) - 2011 silver supply outlook depends Changes in investment demand and its impact on the supply chain.
As the prices of all kinds of metals rise, the market expects that silver minerals will increase in 2011. Because silver is usually a by-product of other metal minerals such as zinc, lead, gold, and copper.
The silver price is currently around 28 US dollars per ounce, but in 2010 the silver price once rose to more than 30 US dollars, setting a record high in recent decades. At the same time, the price of gold and copper also successively set a record high.
Generally speaking, when the supply of a certain commodity increases, its price return will decrease relatively. But silver is an exception because in times of instability, investors see silver, whose price is lower than gold, as one of the best safe-haven assets. In the past period of time, with the recovery of global manufacturing industry, the demand for industrial silver has increased. But so far, generally speaking, the increase in investment demand is the main reason for the rise in the price of silver.
But investment demand is often unpredictable, which is why market observers are hesitant to predict investment demand. Compared with relatively simple manufacturing requirements, investment demand not only triggers price shocks, but it is often irregular.
Due to the emergence of Exchange Traded Exchange (ETF) and the physical trading of silver (the precious metal's most popular trading method is physical trading, which means that investors will purchase precious metal entities and store them in a safe place. The demand for silver investment has been rising. Just as silver is easily stored, silver is easy to sell, making silver prices change all the time.
The total amount of silver held by the ETF reached 15,251 tons in mid-December, setting a record high. A ton is about 32,150 troy ounces, which is 490 million ounces.
There is controversy among analysts on silver production forecast. The CPM Group estimated that the silver production in 2010 was 741.5 million ounces, and believed that almost all of the silver production came from Mexico's Goldcorp's Penasquito mine, which produced only 20 million ounces. At the same time, CPM expects total silver supply in 2010 (including sporadic production and other) of 1.028 billion ounces.
The CPM Group forecast 2011 silver minerals of 768.98 million ounces (total supply of 1.067 billion ounces), and they will increase the ratio of production from mine sources to total supply from 20% to 22%. "The increase in silver mineral proportions shows the popularity of the silver market from the side," said Erica Rann EStad, commodities analyst at CPM Group.
Compared with the CPM Group, other institutions' forecasts on silver supply are less optimistic. The BMO Research Center predicts that silver production from base metals and gold mines will increase by an average of 1.8% over the next two years. They believe that silver production totaled 887 million ounces in 2010, compared to 9.3 million ounces in 2011. BNP Paribas estimated that production in 2010 would be 928 million ounces, compared with 915 million ounces in 2011. In addition, the two agencies estimate the silver sporadic output much lower than the CPM Group.
As the supply of silver minerals may increase with the growth of large deposits of other metals, analysts at Barclays predicted in an analysis report that the output of silver mines will set a new record.
As the global economy recovers, manufacturing output has risen. Industrial demand will stimulate the growth of silver production.
Rannestad said that in the manufacturing industry, especially the electronics industry, the demand for silver has been steadily increasing. In the field of green technology, the application of silver in the solar energy and pharmaceutical industries (used for sterilization) is also becoming more and more widespread, which also provides a boost to the demand for silver.
The CPM Group forecasts total manufacturing demand in 2010 (mainly in the battery pack, pharmaceutical industry, and silver coin manufacturing, etc.) of approximately 875.6 million ounces, and forecasts that this figure will grow to 907.1 million ounces in 2011. BMO estimates total industrial demand in 2010 was 783 million ounces, compared with 833 million ounces in 2011. BNP Paribas estimates are 825 million ounces and 861 million ounces respectively.
Excluding that portion of silver consumed by industry, the rest is used to meet investment needs, and in the investment market, silver has become more elusive. Rannestad believes that forecasting investment demand is very difficult, because this data is based on the relationship between supply and demand. The CPM Group believes that investment demand for silver in 2011 will continue to grow, but no specific forecast data has been given. At the same time, CPM estimated that the investment demand for silver in 2010 was 82 million ounces.
BMO forecasts that the investment demand for silver in 2010 is 75 million ounces, which is similar to the CPM forecast. However, they forecast investment demand of 100 million ounces. They predict that there will be a shortage of silver supply in 2011, with a supply deficit of 30 million ounces.
BNP Paribas predicts that the ETF will enter the silver market and believes that the investment demand in 2010 is 103 million ounces, compared with 101 million ounces in 11 years. If their forecasted investment demand is included in the balance sheet, there will be a silver supply deficit.
In fact, whether the supply is a surplus or a deficit depends on how the supply is calculated and whether this calculation is accepted by market observers. Barclays Bank stated that the silver supply deficit has limited the amount of silver investment. "Compared to gold, we think the silver market is not that active," Barclays said in a report.
Rannestad said that since silver plays an increasingly important role in gold production, talking about the silver balance may be confusing. "Investment demand for spot silver is very strong. When you look at the balance between supply and demand for silver, you can't just compare the manufacturing demand and supply of silver because there is investment demand. Silver's investment demand is strong, and we think silver will keep rising. The trend is the reason why we predict that the supply will increase in the coming year."
Puru Saxena, CEO of Puru Saxena Wealth Management, said that because of the current strong demand for silver investment, he does not worry about rising supply. "If prices continue to rise, more mines will be developed and supply will continue to increase," he said.
Like gold, silver has benefited from the proliferation of banknotes caused by the US quantitative easing policy. At present, there is still a big gap between the price of silver and its historical high, which means that there is still room for a rise in silver prices. "I think silver prices will eventually become a huge bubble, and silver gains will also burst in the bubble." It ended, but that may be two or three years later," said Puru Saxen. "Like what happened in the 1970s, there may be higher interest rates in the future. Such policies will suppress the price of silver."
"The rise in silver prices directly stimulates the increase in mine production," Rannestad said. "In 2009, for every ounce of silver produced, we spent $5.26 in wages, which rose to $5.38 in 2010. BMO stated that it takes into account production costs and capital expenditures. A break-even balance can be achieved at a price of at least $14 per ounce of silver.
This price is lower than the current silver price - 28 US dollars / ounce. As long as investment demand remains strong, CPM Group believes that the average price of silver for the coming year will be around $24, which is higher than the 2010 average of $19.97. BMO predicts that the average silver price in 2011 will be US$28. BNP Paribas expects the average price in the first quarter of 2011 to be US$25.30 per ounce, while Barclays Bank predicts that the 2011 average price will be US$28.10 per ounce.
As the prices of all kinds of metals rise, the market expects that silver minerals will increase in 2011. Because silver is usually a by-product of other metal minerals such as zinc, lead, gold, and copper.
The silver price is currently around 28 US dollars per ounce, but in 2010 the silver price once rose to more than 30 US dollars, setting a record high in recent decades. At the same time, the price of gold and copper also successively set a record high.
Generally speaking, when the supply of a certain commodity increases, its price return will decrease relatively. But silver is an exception because in times of instability, investors see silver, whose price is lower than gold, as one of the best safe-haven assets. In the past period of time, with the recovery of global manufacturing industry, the demand for industrial silver has increased. But so far, generally speaking, the increase in investment demand is the main reason for the rise in the price of silver.
But investment demand is often unpredictable, which is why market observers are hesitant to predict investment demand. Compared with relatively simple manufacturing requirements, investment demand not only triggers price shocks, but it is often irregular.
Due to the emergence of Exchange Traded Exchange (ETF) and the physical trading of silver (the precious metal's most popular trading method is physical trading, which means that investors will purchase precious metal entities and store them in a safe place. The demand for silver investment has been rising. Just as silver is easily stored, silver is easy to sell, making silver prices change all the time.
The total amount of silver held by the ETF reached 15,251 tons in mid-December, setting a record high. A ton is about 32,150 troy ounces, which is 490 million ounces.
There is controversy among analysts on silver production forecast. The CPM Group estimated that the silver production in 2010 was 741.5 million ounces, and believed that almost all of the silver production came from Mexico's Goldcorp's Penasquito mine, which produced only 20 million ounces. At the same time, CPM expects total silver supply in 2010 (including sporadic production and other) of 1.028 billion ounces.
The CPM Group forecast 2011 silver minerals of 768.98 million ounces (total supply of 1.067 billion ounces), and they will increase the ratio of production from mine sources to total supply from 20% to 22%. "The increase in silver mineral proportions shows the popularity of the silver market from the side," said Erica Rann EStad, commodities analyst at CPM Group.
Compared with the CPM Group, other institutions' forecasts on silver supply are less optimistic. The BMO Research Center predicts that silver production from base metals and gold mines will increase by an average of 1.8% over the next two years. They believe that silver production totaled 887 million ounces in 2010, compared to 9.3 million ounces in 2011. BNP Paribas estimated that production in 2010 would be 928 million ounces, compared with 915 million ounces in 2011. In addition, the two agencies estimate the silver sporadic output much lower than the CPM Group.
As the supply of silver minerals may increase with the growth of large deposits of other metals, analysts at Barclays predicted in an analysis report that the output of silver mines will set a new record.
As the global economy recovers, manufacturing output has risen. Industrial demand will stimulate the growth of silver production.
Rannestad said that in the manufacturing industry, especially the electronics industry, the demand for silver has been steadily increasing. In the field of green technology, the application of silver in the solar energy and pharmaceutical industries (used for sterilization) is also becoming more and more widespread, which also provides a boost to the demand for silver.
The CPM Group forecasts total manufacturing demand in 2010 (mainly in the battery pack, pharmaceutical industry, and silver coin manufacturing, etc.) of approximately 875.6 million ounces, and forecasts that this figure will grow to 907.1 million ounces in 2011. BMO estimates total industrial demand in 2010 was 783 million ounces, compared with 833 million ounces in 2011. BNP Paribas estimates are 825 million ounces and 861 million ounces respectively.
Excluding that portion of silver consumed by industry, the rest is used to meet investment needs, and in the investment market, silver has become more elusive. Rannestad believes that forecasting investment demand is very difficult, because this data is based on the relationship between supply and demand. The CPM Group believes that investment demand for silver in 2011 will continue to grow, but no specific forecast data has been given. At the same time, CPM estimated that the investment demand for silver in 2010 was 82 million ounces.
BMO forecasts that the investment demand for silver in 2010 is 75 million ounces, which is similar to the CPM forecast. However, they forecast investment demand of 100 million ounces. They predict that there will be a shortage of silver supply in 2011, with a supply deficit of 30 million ounces.
BNP Paribas predicts that the ETF will enter the silver market and believes that the investment demand in 2010 is 103 million ounces, compared with 101 million ounces in 11 years. If their forecasted investment demand is included in the balance sheet, there will be a silver supply deficit.
In fact, whether the supply is a surplus or a deficit depends on how the supply is calculated and whether this calculation is accepted by market observers. Barclays Bank stated that the silver supply deficit has limited the amount of silver investment. "Compared to gold, we think the silver market is not that active," Barclays said in a report.
Rannestad said that since silver plays an increasingly important role in gold production, talking about the silver balance may be confusing. "Investment demand for spot silver is very strong. When you look at the balance between supply and demand for silver, you can't just compare the manufacturing demand and supply of silver because there is investment demand. Silver's investment demand is strong, and we think silver will keep rising. The trend is the reason why we predict that the supply will increase in the coming year."
Puru Saxena, CEO of Puru Saxena Wealth Management, said that because of the current strong demand for silver investment, he does not worry about rising supply. "If prices continue to rise, more mines will be developed and supply will continue to increase," he said.
Like gold, silver has benefited from the proliferation of banknotes caused by the US quantitative easing policy. At present, there is still a big gap between the price of silver and its historical high, which means that there is still room for a rise in silver prices. "I think silver prices will eventually become a huge bubble, and silver gains will also burst in the bubble." It ended, but that may be two or three years later," said Puru Saxen. "Like what happened in the 1970s, there may be higher interest rates in the future. Such policies will suppress the price of silver."
"The rise in silver prices directly stimulates the increase in mine production," Rannestad said. "In 2009, for every ounce of silver produced, we spent $5.26 in wages, which rose to $5.38 in 2010. BMO stated that it takes into account production costs and capital expenditures. A break-even balance can be achieved at a price of at least $14 per ounce of silver.
This price is lower than the current silver price - 28 US dollars / ounce. As long as investment demand remains strong, CPM Group believes that the average price of silver for the coming year will be around $24, which is higher than the 2010 average of $19.97. BMO predicts that the average silver price in 2011 will be US$28. BNP Paribas expects the average price in the first quarter of 2011 to be US$25.30 per ounce, while Barclays Bank predicts that the 2011 average price will be US$28.10 per ounce.