The Banking and Strategy Initiative

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Gold, Silver finally moving on own steam | Commodities insight

Silver started a secular move up on Commodities exchanges in India about two hours ago soon after it hit rock bottom from its bull run of 2011 that was broken mid year as Global economic recoveries and metals consumption slowdown took off the sheen from the “Commodities bubble” that resulted in the twin peaks in a four year long global recession, recoveries fuelled by easy LTRO and QE money that set inflation awash in Asia yet barely saved US and  Europe from a deflation spiral. Globally silver is expected to double from $30 per oz to at least $60 per oz in the next 12 months. The Silver is counted ona year starting August 2012 for Demand and Supply calculations and Bloomberg suggests ( Silver fabrication is going to hit 28,677 tonnes this year counting solders and coins. Electronics alone account for 8,300 tonnes. Investors on Exchange traded products hold 17,576 tonnes of the metal and will add another 750 tons to it in the new year. Forecasts for May-July 2012 are for a $7 per oz pop in prices  Bets on the metal were down 2/3rds in the last two months. Gold is trading below $1600 similarily.

Euro’s trading down with Spanish yields above 6% and the Aussie is about to break par after a long wait, albeit unexpected after RBA just cut rates by 50 bp and Chiness growth in production did not translate into good news for Copper or Iron exporters. Meanwhile China has amassed a 3 mln tonne warehoused position in Cotton and continues importing even as India is expecting to complete 11 mln bales of cotton or more than athird of production in Exports this year.

Silver is used in Solar panels, batteries and film for half of the consumption of the metal. Additional investment demand is likely to remain slack for some time in a trend beginning in March but the surplus of hardly 3,500 tonnes is unlikely to deter prices from rising once the demand forecast sinks in.  The EURUSD is trading $1.2935 from 1.2987 at Day begin in Europe


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