Silver price to rise in 2017 on renewed investor interest

(April 26, 2017 - by Marcy Nicholson)

The price of silver will likely climb in 2017 and over the next several years, following through on 2016’s gains on renewed investor interest in precious metals, CPM Group said on Tuesday.

"The political risks are presently high and while nothing may happen, the possibility that something could should keep investors interested in safe haven assets," New York-based CPM Group said in its Silver Yearbook 2017.

"This does not mean that silver prices should be expected only to rise, and to rise to phenomenal levels once more, but it does suggest in CPM Group’s analysis that prices are likely to rise in 2017 and over the next several years," the commodities market research firm added in a press release.

Spot silver prices finished up 15 percent in 2016, following three straight years lower and marking the strongest annual performance in six years. Prices are up roughly 12 percent so far this year.

"Even though silver has several industrial uses, which should make economic growth a positive for prices, the price of the metal is influenced more greatly by its status as an investment and safe haven asset and so prices are more likely to be positively affected by an economic meltdown versus an improvement in economic growth," CPM said.

Still, investors bought the smallest amount of silver in 2016 since 2008. In 2016, investors bought about 108.9 million ounces of silver and are forecast to ramp this up to 121.4 million ounces in 2017, CPM said.

Global silver mine production was forecast to rise to a record 809.1 million ounces in 2017, up 0.3 percent from 2016. This marked the sixth straight year higher while fabrication demand was seen falling by 1.3 percent to 889.6 million ounces, following four straight years of growth.

The drop was forecast largely due to the expectation for the use of silver in solar panels to decrease 20 percent from 2016 to 68.7 million ounces, the first fall in five years with demand expected to fall in the United States and China, CPM said.