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Metals Focus: 'Limited' Impact On Silver Industrial Demand From Trade War

Kitco News

Globally, a trade war likely will have limited impact on the industrial use of silver, says the consultancy Metals Focus. Analysts offered the assessment after the International Monetary Fund this week downwardly revised its forecast for global economic growth in 2018 and 2019 due mainly to the U.S.-China trade war. Generally, investors have shrugged off trade-war fears, as reflected by a strong stock market, Metals Focus says. Nevertheless, analysts cite data showing that industrial demand is important to the silver market. They look for industrial silver demand to rise 0.2% to 514 million ounces, which would be the highest total of the decade. “In terms of overall supply/demand, industrial offtake now accounts for 54% of the global total (vs. 50% in 2010),” Metals Focus says, calling this demand a “success story” despite efforts to thrift on silver. “Regarding the direct impact of the trade war on silver consuming industries, in most cases we believe that, at least at a global level, this will be limited,” Metals Focus says. “A globalized supply chain should allow many manufacturers to shift sourcing and production across different geographies. Naturally, there will be winners and losers, but the industry as a whole should be able to adapt to the new regime.” Still, Metals Focus says it looks for a market surplus this year of 48 million silver ounces, noting that other forms of demand, such as physical investment, have declined.

By Allen Sykora of Kitco News; asykora@kitco.com

 

Commerzbank: IMF Economic Forecast Improves Gold Outlook

Wednesday October 10, 2018 09:52

Commerzbank says the International Monetary Fund’s downwardly adjusted forecast for growth in the global economy in 2018 – a decline of 0.2 percentage points to 3.7% -- should help the outlook for gold. “Above all, this means less tailwind for the stock markets, which have already fallen noticeably in recent days,” the bank says. “Gold should profit as soon as this is reflected in rising risk aversion.” Analysts also note that there have not been any further significant outflows from gold exchange-traded funds lately, although there likewise have not been fresh inflows. “For the gold price to make any marked gains, the negative sentiment among speculative financial investors also will have to turn,” Commerzbank adds.

By Allen Sykora of Kitco News; asykora@kitco.com

 

U.S. Deficit Growing At Record Pace Outside Of A Recession – BNP Paribas

Wednesday October 10, 2018 09:17

The economic team at BNP Paribas is highlighting growing government debt in the U.S. Jean-Luc Proutat, head of OECD economies, notes that U.S. deficits are exploding as the government pushes massive economic stimulus measures. “While supporting the business climate, these actions have exploded the Federal deficit, which actually reports one of its biggest increases ever outside of a recession,” he says. “One could say it is no big deal for the United States, thanks to the dollar’s international status. Yet, the fiscal boost has its limits. In many respects, US policy consists of accelerating an engine that is already close to full speed.” Proutat’s comments come as U.S. 10-year yields trade near their highest levels in seven years.

By Neils Christensen of Kitco News; nchristensen@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 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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