India Silver Q1, 2012 outlook: Angel Commodities

The year 2011 has been mixed as far as movement in Silver prices is concerned. After marking a close to all-time high of $49.83/oz in April’11, the white metal witnessed sharp downside to levels around $26/oz in the second-half of the year.

Economic concerns have dominated movement in silver prices, as it is an industrial metal apart from being a precious metal. Silver has taken mixed cues during the year i.e. from Gold and base metals.

In Q4, 2011
Spot Silver slipped around 7.4 percent but silver futures on the MCX closed higher by 2 percent in the same period as Rupee weakness supported upside. Silver futures on the Comex witnessed a sharp fall of 7.2 percent in the fourth quarter of last year and prices of spot silver in Mumbai also declined almost 2 percent, touching a low of Rs48,980/kg in the last quarter of 2011.

Quarterly performance of Comex Silver shows that average prices declined sharply by more than 18 percent in the Q42011 to $31.69/oz from the previous level of $38.81/oz in Q32011. On a year-on-year basis, average Comex silver prices in Q42011 were 19.5 percent higher than prices in Q42010. However, average quarterly Silver prices on the MCX declined by 7.7 percent to Rs54,779/kg in Q42011 from the prior level of Rs59,349/kg in Q32011. On a y-o-y basis, average silver prices on the domestic bourses surged sharply by more than 37 percent in the Q42011 from the previous Rs39,914/kg in Q42010.

Silver holdings in the iShares Silver Trust, the world’s largest silver-backed exchange-traded fund, declined sharply by almost 4 percent to 9605.79 tonnes on 30th December 2011 from the previous 9995.68 tonnes on 30 th September 2011. In 2011, holdings dropped more than 12 percent after touching a high of 11,390 tonnes in the last week of April 2011.

What to expect?
In the short term, movement in silver is expected to be driven by a cautious tone as market sentiments remain mixed on account of uncertainty in the global economy. Any further economic uncertainty is expected to Lead to pressure on prices.

Source: Angel Commodities Quarterly Review and Outlook report

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Posted by Silver Guru on Feb 1 2012. Filed under Silver Analysis. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry