By John McDonald
Despite growing headwinds in the form of ongoing uncertainty about trade tensions between the United States and China, precious-metals analysts predict silver will finish out the year “with a win,” according to research firm The Silver Institute.
Overall, the report indicated researchers expect average silver prices to close out the year at least 3 percent higher than the precious metal ended 2018, placing values around $17 an ounce.
As mid-November neared, silver fell off of its three-year highs hit in September 2019 but remained solidly above values set at the beginning of this year.
In addition to concerns over a volatile trade war between the U.S. and China, silver investors were worried earlier in 2019 about a surplus in the global silver market that might drive prices down.
However, the very trade tensions that have many investors worried are likely bolstering silver values.
Investors who do not have the financial wherewithal to place capital in safe-haven gold or who want more diversity in their precious-metals portfolios buy silver to complement their yellow-metal holdings.
The report cited “robust investor appetite” for silver as playing an important role in stable global demand for silver.
However, industrial demand is also keeping values up. Silver has the highest-known electrical and thermal conductivity of all metals and is used in printed electrical circuits and electronic conductors.
Most precious metals’ values, including that of silver, have been subject to the whims of trade tensions in 2019.
When the United States or China indicated optimism that the conflict would be resolved, markets rallied and many investors backed out of safe-haven investments in an attempt to cash in on market growth.
However, when tensions heightened, investors would pile back into precious metals.
As the cycle continued to repeat throughout 2019, investors became somewhat immune to the temptation to back out of precious metals investments even though they continued to swarm the financial markets when the outlook for a trade agreement brightened.
The result has been a stable base for silver prices despite ongoing volatility and even positive movement in the financial markets.
This is good news for silver investors, especially since ongoing investor interest in silver as an asset vehicle should absorb any small surplus in the silver market moving into 2019.
Given that many central banks are initiating fresh rounds of “monetary easing” (read: lowering interest rates), the demand for silver and other precious metals as a hedge against inflation will likely remain high as well.