NEW YORK (Scrap Register): Metals Focus sees silver rising later this year, suggesting the metal may outperform gold. Headwinds for the precious metals may last for a while yet, the consultancy said, listing ongoing trade tensions that have led to U.S. dollar strength and investors rotating out of emerging-market bonds and equities into U.S. Treasury notes.
The consultancy also said a silver supply surplus is building, noting that Comex silver warehouse stocks have hit all-time highs. Further, retail investment has been soft.
In spite of these headwinds, Metals Focus believes that silver prices will start to recover in late 2018. Analysts said they look for the dollar to turn lower, since two more U.S. rate hikes this year are already factored into prices.
Further, many suspect equity prices have peaked, the consultancy continues. Money managers hold a net-short position in silver futures, which may prompt a short-covering rally when they buy to exit, Metals Focus explains.
Moreover, when conditions start to turn more positive for precious metals, there is scope for silver to reassert itself and so outperform the yellow metal.