© Edward Meir
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The fundamentals in silver are looking a little bit better and there are a lot of production cutbacks coming in. Some of the mines are closing; some of the zinc mines and lead mines that have silver as a derivative product are shutting down, so the fundamentals of the market look a bit better. The issue is that if prices rally very sharply it will impact jewellery consumption, since silver is very price sensitive on a jewellery side. There is a bit of a balance – if producers like the high prices there will be less demand.
The other thing that will influence silver is obviously the price of gold, and we are somewhat bullish on the yellow metal. We think that this central banks' easing that is taking place across the world will be bullish for gold. The metal will also be a good hedge for some investors who are looking to protect themselves against a drop in the equity markets. Thus, we think with gold looking steady silver should benefit. However, it is not the first choice for investors, since they would rather buy gold than silver, because silver is also much more of an industrial metal and its fortunes are tied more to manufacturing activity and, I suppose, to investor activity. There is an investor activity, but gold is the predominant metal in terms of people looking to hedge their portfolio's exposure. It is a mixed bag in terms of all the various influences on silver.
What is your current forecast for the silver price in the next three months?
In terms of price forecasts, we did get last month to the 15-month high of $17.72. I believe this year we could possibly get to $18.50 and the low would be of something like $14.60, so the trading range of $14.60 to $18.50. I am bullish on silver, but I suppose most of the moves are likely behind us, since it shot up very quickly and I do not expect that we would have much more than $18.50 to go on the upside for 2016.