Mixed messages from silver sector

Silver has repeatedly tested support at $31.50 per ounce, and the supply situation at the physical silver markets remains tense owing to high industrial demand. However, silver reserves at the New York Comex have reached their highest level in a decade, indicative of a drop off in investor demand.

Annual silver production stands at around 700 million ounces, while demand is running at 1 billion ounces annually; recycling provides the other 300 million ounces. Many industries cannot do without silver, given the metal’s unique physical and chemical qualities, and the recent global economic slowdown has hardly affected industrial silver demand. However demand for investment silver has slackened somewhat in recent weeks.

The silver price chart is indicating that a breakout could be close – though whether it’s to the upside or the downside is the big question. An upside breakout could propel the price up to $42 per ounce in short order, with it only a matter of time until it touched the $50 mark again.

According to Reuters, Comex silver stockpiles are now at their highest level in a decade – a sign of weakening investor demand. Soon we will see which factors will have more influence on the silver price: physical demand from industrial users or investor demand.

Author: Roman Baudzus

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