Silver Demand Set For Dramatic Climb To Historic High In 2013

The out-of-proportion Gold to Silver ratio which should move back down is one of the best reasons why Silver will rise faster than Gold. Higher investment demand as paper money loses value and at the same time Gold prices lose their biggest support – the Ultra loose monetary policy of many central Banks, especially the US Federal Reserve, namely the QE. Higher industrial demand will give Silver a double sided edge as it’s used for solar panels, lighting, electronics and much more.

Neither did ECB make any moves on interest rates, nor did Bank of England touch its monetary policy yesterday, both as expected. A weaker than expected US weekly jobless claims report issued Thursday morning and upbeat comments coming from European Central Bank President Mario Drahgi at his monthly press conference, regarding the European Union’s economic and financial prospects, put strong downside price pressure on the US dollar and rallied the euro currency. The news and data boosted the Precious Metals markets. China’s trade surplus rose sharply in December, with exports rising more than expected.

The stronger-than-expected Chinese economic data was also a significantly bullish fundamental factor for Metals. Gold and Silver Futures rose yesterday setting the tone for a higher weekly close. The February Comex Gold Futures contract has broken above the 200-day moving average at $1,667 an ounce, that had been acting as a ceiling lately. Among the Base Metals, Copper is widely watched as a leading economic indicator and in 2013 that role could be more telling. I would prefer buying at dips in Copper as well as Lead for the longer term. Demand from China remains a stronghold for the market, so obviously with the strong data from China, Base Metal demand is bound to rise and so will the prices.

Silver Starts 2013 movements:
January 7, the first day of sales for the new 2013 American Silver Eagle bullion coins, saw a record number of Silver coins sold, totaling 3,937,000. That fresh tally of 99.9% pure Silver Eagles puts January 2013 as the fifth strongest month for the popular American Silver Eagles since its launch in 1986. Demand for Silver Eagles has soared in recent years. The 2012 Silver Eagles were set to log the second best annual total until the unforeseen sell out. Annual sales for last year reached 33,742,500 Silver Coins, good for the third-highest total.

Holding the top spot is 2011, with sales of 39,868,500. Second is 2010, with 34,662,500 Silver coins sold. Adding to the buying frenzy in the past couple months is Silver’s spot price, which many deem a bargain. From 2001 to 2010, Silver prices gained a tepid $4.37 to $20.19. In late April 2011, silver surged, peaking at $49.76. Currently Silver is trading around $30.80 an ounce, but could climb to $50 an ounce or even above in 2013.

Silver ETF Investments on the rise:
Besides buying Silver coins, Silver Investors also are pouring money into Silver ETF - Exchange-traded funds. Net inflows to Silver ETFs were up last month despite it being a losing month for prices. As forecasted since early 2012, Silver now seems the clear market favorite. Interest in Silver has surprised many despite a 12% fall in December. Net inflow totality was 311 metric tons in the final month of 2012, a rise of 1.6%. For the whole year, Silver ETFs recorded an 8.5% rise in inflows to 1,482.2 metric tons. Similarly, Gold ETF inflows in 2012 climbed 12% from the same period a year ago, to 287.2 metric tons.

The rise was fueled by demand for Gold and Silver as cautious market participants bulked up Gold and Silver Holdings “to hedge against expected massive currency debasement. iShares Silver Trust ETF is up 2.3% so far this year, and ProShares Ultra Silver ETF has gained 4.13%. According to a Bloomberg survey of 49 analysts, traders and investors, the median estimate is for Silver to gain as much as 31% in 2013 to $40.25 an ounce.

Silver Demand Support from China:
China To More Than Double Solar-Power Capacity In 2013 – China, the world’s largest energy consumer, intends to add an additional 10 gigawatts (GW) of installed solar power capacity to its present energy supply by the end of 2013, said a statement on the National Energy Administration on Tuesday, providing a much needed boost for domestic solar manufacturers, who have suffered heavy losses over the last year due to sliding foreign demand.

According to an industry insider, speaking to the state-run Xinhua News Agency, high-ranking Chinese government officials had been organizing closed-door meetings with photovoltaic (PV) energy plants since last November, when both the US and Europe launched anti-dumping measures on Chinese solar power products in retaliation to a global overcapacity in solar panels. Accordingly, the Chinese government now appears to be fast-tracking and expanding its energy targets, particularly for solar power, where installed solar power capacity is expected to grow to 40 GW by 2015, instead of the current 21 GW target.

At the end of 2012, China already had 7 GW of installed solar power capacity. By adding an additional 10GW,China would be just 4 GW short of its stated 2015 target, two years ahead of schedule. We believe that it is no coincidence that China is aggressively expanding its solar installation goals at a time when its manufacturers are struggling to stay alive. Silver plays an important role as it is a crucial component in these Solar Power panels. Silver demand is bound to rise on such mega physical requirements.