SILVER
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(COMMENTS BELOW ARE UPDATED AS OF THE U.S. CLOSE ON MONDAY, APRIL 28)
TECHNICAL FORECAST: Short term indicators remain mostly negative.
Summary: Silver was up a little today (Monday) but still near the lowest point in 3 months - in the past few weeks silver fell from its high of $20.78 to today's close of $17.01, a change from the uptrend in which the silver price has been for much of the past year. Click for recent activity May contract. Click here for 2 year chart. Click here for nighttime futures trading quote. Click here for 24 hour spot silver price (scroll down the page).
The short term indicators began to turn toward negative as the price fell in the past few weeks. (Visit the gold page for more details.)
The precious metals prices have recently been influenced by the stock markets although now appear to be more influenced by the Crude Oil market which is now trading near $116, down over $2 today but still near the highest point in history. A sustained rise in the Crude Oil will likely be bullish for the precious metals although a decline in the Crude Oil would tend to be bearish for the precious metals.
There are some similarities to the gold and silver market in 1979 and 1980 when silver soared to around $50 an ounce. Now, as then, the oil price rose to levels not seen before. Now also the value of the U.S. Dollar has been declining. There was uncertainty in the Middle East as there is now. One major exception is that U.S. interest rates were rising then as inflation hit double digits - that is not the case now as interest rates have been declining, not rising.
The precious metals are also influenced by the U.S. Dollar. The U.S. Dollar Index (JUNE contract) closed today (Monday) at 72.80 from 73.03 on Friday, still near the lowest price in a quarter of a century, still well below the high of 92.53 hit in November 2005 and well below its all time record high in 2002 near 120.00. Click here for a longer term chart of the Dollar.
The latest Commitment of Traders report (as of April 22) shows that long speculators in the silver market outnumber the shorts by over 4 to one, the long speculators accounting for 49% of the market versus 10% short.
Before the silver started to rise in the past few years, the average open interest was usually between 70,000 and 80,000 (compared to near 127 thousand now, beginning to fall back in the past few weeks).
Silver Fundamentals - Supply and Demand:
For an easy picture of silver demand for the past 10 years (and other interesting information), click on the World Silver Institute, one of the premier industry sources (scroll down the page for more demand information). (There has been a very noticeable change in demand for photographic use due to the use of digital cameras.)
Following are supply and demand figures (in metric tons) for the past 7 years. Most notable is that demand is down over 67 (metric) tonnes in the past 7 years, while supply has risen.
| Global Silver Supply:* |
2000 |
2001 |
2002 |
2003 |
2004 | 2005 | 2006 |
| Mine Production | 582.2 | 589.2 | 585.9 | 595.6 | 634.4 | 641.6 | 646.1 |
| Global Government Sales* | 78.1 | 87.2 | 71.3 | 82.6 | 61.7 | 68.0 | 77.7 |
| Old Silver Scrap | 179.2 | 182.7 | 184.9 | 191.6 | 181.1 | 187.3 | 188.0 |
| Total Supply | 839.5 | 859.1 | 842.1 | 869.8 | 877.2 | 896.9 | 911.8 |
| = | = | = | = | = | = | = | |
| Global Silver Demand:* |
2000 |
2001 |
2002 |
2003 | 2004 | 2005 | 2006 |
| Industrial Applications | 377.1 | 338.1 | 342.4 | 351.2 | 367.1 | 409.3 | 430.0 |
| Photography | 219.5 | 213.9 | 205.3 | 196.1 | 181.0 | 164.8 | 145.8 |
| Jewelry & Silverware | 281.4 | 286.0 | 259.2 | 276.7 | 247.5 | 249.6 | 224.9 |
| Coins & Medals | 29.8 | 30.5 | 31.3 | 35.3 | 41.1 | 40.6 | 39.8 |
| Total Demand | 907.8 | 868.5 | 838.2 | 859.3 | 836.7 | 864.4 | 840.5 |
* Excludes producer hedging of future production (relatively minor); figures may be rounded off.
As a indication of the public's interest in silver now, following are the figures published by the U.S. Mint showing the amount of silver coins sold by the U.S. Mint (in no. of ounces):
|
No. of Ounces | |
|
1997 |
3,636,000 |
| 1998 | 4,320,000 |
| 1999 | 9,008,500 |
| 2000 | 9,133,000 |
| 2001 | 8,827,500 |
| 2002 | 10,475,500 |
| 2003 | 9,153,500 |
| 2004 | 9,617,000 |
| 2005 | 8,405,000 |
| 2006 | 9,981,000 |
Judging from these figures, it appears there is no rush to buy silver coins in the U.S.
(Average open interest in the past decade was mostly between 75,000 and 115,000 open contracts.
Click here for a long term look at
Silver (Monthly
Chart) (updated monthly) or click for
the Silver Weekly
Chart (updated weekly).
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*Nighttime quotes are delayed, usually 30 minutes. (56k modems may take slightly longer.)
* Commitment of Traders percentage figures rounded off.
** Open interest figures refer to the previous day's trading since they are not released by the exchange until the following day.