Once again the silver market has caught investors out as the price is nearing areas not seen since 2008.
Since Jan of 2017 the silver price has been A disappoint to investors, with only a marginal 5% gain so far in 2017, the precious metal has ultimately performed well below expectations this year.
Many market participants were taken by surprise this year as silver demand fell in a number of areas. One of which is India.
The fundamentals in the silver market look a bit complicated for 2018. There are several forces pulling in different directions for the price of silver going forward:
However, things may take a turn for the positive for the industrial precious metal as industry observers believe it may start to outperform gold in 2018. However Incomes and the economy and both growing which leads the report to conclude that demand will come back to the country.
Recently, North Korea has been back in the news and lifted the price of silver back above $17. At the UN General Assembly, North Korean Foreign Minister Ri Yong Ho said one of Trump’s weekend tweets was a “declaration of war.” The tweet involved Trump saying North Korea “won’t be around much longer.”
A recent report by Metals Focus says, the precious metals consultancy concluded that ‘we do expect silver to eventually outperform gold.’
Looking ahead one year ahead, approx. 1-in-4 bets on November 2018 Fed funds futures now forecasts 3 or more rate hikes coming in 2018, more than double the level of this time last month.
Another immediate reason why silver may perform in the course of 2018 – is that US dollar weakness looks to be an established trend now, and will get worse.
A weaker dollar is good for commodity prices – and that includes gold and silver, which always react strongly to the first whiff of inflation.