Silver has increased in value 9 percent since the start of the year, largely due to improving sentiment among institutional investors. But, in the past couple weeks, many of the gains in 2017 have been erased.
“Changing expectations towards the outlook for U.S. interest rates and the proliferation of negative policy rates across other key reserve currencies has rekindled institutional investor interest in precious metals,” according to the Silver Institute. “Meanwhile, a marked improvement in silver industrial offtake, led by photovoltaics, which achieved a record high last year, is also helping. All these factors in turn have fueled investment inflows into silver futures, options, exchange traded products (ETPs) and over-the-counter products.”
A forthcoming U.S. Fed rate hike this month led to precious metals sales. 2016 marked silver’s first yearly rise in a 9 percent increase.
“Turning to physical investment, sales of silver bars and coins in 2016 fell from 2015’s record high, due to a downturn in U.S. and Indian demand, the world’s two largest markets, according to Metals Focus, the precious metals consultancy based in London,” writes the Silver Institute. “In part, this reflected some market saturation after several years of very strong demand. The price recovery also meant that 2016 saw no repeat of the surge in bargain hunting seen in 2015.”
Michael DiRienzo, Executive Director of the Silver Institute: “We expect that the factors that buoyed institutional silver investment over much of 2016, and have carried over into the early months of 2017, will remain relevant for the remainder of this year.”
If institutional demand can maintain silver’s gains on the year before March has yet to be seen.