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Profit Confidential (www.ProfitConfidential.com), an e-letter of Lombardi Publishing Corporation, a 29-year-old consumer publisher that has served over one million customers in 141 countries, is weighing in on the current supply and demand imbalance with silver, suggesting it will translate into higher prices.“Currently trading near $17.00 an ounce, silver prices are down approximately 70% from 2011 highs of around $50.00 an ounce with many analysts predicting silver will average just $13.00 per ounce in 2015. If so, that would mark a record fourth consecutive year of declines,” says economist and lead contributor Michael Lombardi. “It’s not surprising then to see that silver has fallen out of favor with investors. That said, while silver prices have fallen, and investor sentiment on the metal is negative, the fundamentals for silver are actually getting better.”
In the first two months of 2015, silver production in Canada was at 64,330 kilograms (kg). In the same period a year ago, silver production was at 73,390 kg—that represents a 12% contraction in the supply of silver in two months from one of the world’s biggest silver-producing countries. (Source: Natural Resources Canada web site; http://sead.nrcan.gc.ca/prod-prod/PCLM-PPMC/PDF/MYMONTHLY.pdf, last accessed May 6, 2015.)
According to the World Gold Survey published by The Silver Institute and Thomson Reuters GFMS, silver production in 2015 is expected to decline for the first time in 12 years. (Source: The Wall Street Journal, May 6, 2015; http://blogs.wsj.com/moneybeat/2015/05/06/silver-mine-supply-is-running-out-of-steam/tab/print/.)
Lombardi explains that while supply is tight, demand for silver has been very aggressive in 2015. In March, India imported $561.4 million worth of silver. In March 2014, it imported $191.1 million. That’s a year-over-year increase of 194%. (Source: India’s Ministry of Commerce & Industry web site; http://commerce.nic.in/tradestats/filedisplay.aspx?id=4, last accessed May 6, 2015.)
According to the World Silver Survey, demand for silver is projected to increase this year due to rising demand for silver coins and silver bars. Demand for silver jewelry is also expected to improve this year, while demand for silver for use in technology is projected to remain consistent in 2015.
“Since November 2014, silver has been trading in a fairly tight range with strong support around $15.50 an ounce. This level has been tested five times without breaking. This means there are a significant amount of buyers at $15.50 an ounce,” Lombardi concludes. “I remain bullish on silver. The mainstream might be turning their back on silver, but looking at the fundamentals, with demand rising and supply falling, I see the foundation in the works for a strong rise in silver prices.”
Founded in 1986, Lombardi Publishing Corporation, which has served over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more information on Lombardi Publishing Corporation, visit www.lombardipublishing.com.
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