Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Speculators and traders continued to boost their bullish net positions in the silver futures markets last week for a third consecutive week, which has many predicting the precious metal is as close as it can be to a major breakout point.
Daniela Corsini, analyst at Intesa Sanpaolo bank, is just one of them. She told Bloomberg yesterday that silver prices were likely to climb to $19 an ounce by year-end, compared with Wednesday morning’s price of $18.175 an ounce.
For Taki Tsaklanos, founder and lead analyst at InvestingHaven.com, silver may be reaching that point sooner than that. He say the metal could then begin a tactical bull market as far as it remains above $19 for the three consecutive weeks.
“However, readers should not confuse a major breakout with a secular breakout. A major breakout indicates that a tactical bull market is starting. A secular breakout suggests a multi-year bull market is starting. That is a big difference,” he wrote.
Data from the US Commodity Futures Trading Commission shows speculators are long a net 105,515 silver futures contracts. That is by far the highest bullish position since Bloomberg records began in 1993 and is more than three times the average weekly net long over that period, FT.com reports (subs. required):
Silver, which has industrial demand, has seen its gains tempered by the global growth concerns that have contributed to those easing interest rates. Still, precious metal watchers know that, if the sector really starts on a bull run, then silver tends to outperform gold — partly because its smaller nominal price encourages more speculation by retail investors.
Demand for silver, especially given its industrial applications and use in booming sector including solar energy, is expected to support prices. According to data compiled by GFMS for the Washington-based Silver Institute, about half of global silver consumption in 2015 was related to the metal’s use in the making of smartphones, flat-screen TVs, solar panels, as well as alloys and solders.
The metal, which has gained 15% this year, has however has lagged behind gold by about 3% since the beginning of April and prices fell Wednesday again, with silver losing 8 cents or 0.4%, to $18.20 an ounce at 7:54 a.m. ET.
