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Silver Supply Down; What Will That Mean For Prices? - Capital Economics

(Kitco News) - Production cuts may be starting to take their toll on silver output, suggests one research firm.

“[W]e estimate that silver-mine production declined by 2% in 2016 on a combination of lower output from diversified mines and temporary supply disruptions in dedicated silver mines,” said Simona Gambarini, commodities economist for U.K.-based Capital Economics, in a report Wednesday.

“On paper, there could be an even larger fall in 2017.”

So what could this mean for the silver price?

Gambarini noted that although the firm expects silver output to fall this year, it is likely to pick up again due to rising zinc and lead prices, given that silver is often mined as a by-product.

“The upshot is that the recent fall in silver-mine supply might prove temporary. Nevertheless, we think that demand fundamentals will be more important in determining the direction of prices over the next few years,” she explained.

“As such, our end-2017 and end-2018 forecasts for the price of silver are $14.50 and $17.50 per ounce, respectively, from about $17.80 currently.”

Silver prices have shown resilience so far this year, up over 13 % year to date. May Comex silver last traded at $18.075 an ounce, up 11.2 cents on the day.

By Sarah Benali of Kitco News; sbenali@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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