5 reasons why silver prices would go up despite this correction
1. Robust industrial demand
2. Bullion coin demand
3. Global inflation
4. ETF fund flows
5. Weak dollar
Robust industrial demand
Over
the next five years, silver demand is slated to rise to 666 million
ounces which would form 60% of total fabrication demand. The figure is a
36% increase over 2010’s demand of 487 million ounces; according to
GFMS Ltd. The demand from the industry forms lion’s share of silver
fabrication demand.
Silver use is surging in electronic and thermal
equipments. Stronger industrial demand from US and Asian countries like
India and China through 2015 would keep silver prices up.
Silver coin demand
Recently, director of Canada’s Royal
Mint reportedly told that sourcing of silver was becoming “very
difficult” with prices of the commodity climbing.
Silver prices
and Canadian Maple Leaf and the Silver Eagle should go a lot higher so
that people would find it attractive to sell.
Global inflation
Inflation
is surging around the globe and people are eager for a hedge which they
found in silver bullion. Global inflation made silver to touch an all
time high in the international market recently ($49.820 on Comex).
ETF fund flows into silver
Silver assets being held by the ETFs dropped 1.1% to 15,169.80 metric tons on Tuesday in the event of correction in markets.
But, with the above said fundamentals being strong, it is highly unlikely that ETF fund flows into silver would dwindle.
Weak Dollar
Weak
dollar gives buyers the necessary appetite for silver as well and the
commodity surged almost 4% on the US futures market to a 31-year high of
USD 47.90 recently. With the US debt at historic high levels, and QE2
in progress, the chances are that dollar will continue to remain weak
unless the interest rates are hiked in US. But, this is a remote
possibility.
Back in the past,.silver, touted the poor man's
gold, was reportedly depressed artificially for a while by certain
quarters. But strict norms, later effected changed the horoscope of the
commodity. Fundamentals, rather than speculation began to drive silver.
May be the rally is silver’s cathartic exercise!
