Specs could lift silver, but industrial demand needed to reach $34.50 2012 forecast

A pick-up in speculative interest could offer support for silver, but more substantive gains likely hinge on whenever industrial demand picks up again, says Standard Bank. Slower industrial demand is reflected by a decline in Chinese imports from 400 metric tons in July 2010 to 61 as of November 2011. The bank says this slowdown should stabilize, lending some support to silver.

More support could come if spec buying picks up again. Speculative net length, as a percentage of open interest, currently stands at 10.4%, up from 8% in the last week of December but down from the average of 19.4% since 2007, the bank says. Standard sees “room for some length to be added,” meaning upside potential for prices.

Still, Standard adds: “We expect silver to average $34.50 in 2012, but silver should only trade above this level once industrial demand improves and provides real demand support to prices–speculative interest on its own is unlikely to see the metal moving above $34.50. After all, industrial demand constitutes 55% of total silver demand.” – Kitco

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Posted by Silver Guru on Jan 19 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