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HSBC “not overwhelmingly bullish” but raises silver prices anyway (SLV)

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Global banking powerhouse HSBC ( HBC , quote ) raised its forecast on the silver price for 2012 and 2013 thanks largely to its expectations for strong silver bar and coin investment demand in addition to growing interest in silver ETFs such as the iShares Silver Trust ( SLV , quote ).

The bank forecasts ETF demand alone to absorb 50 million ounces of silver in 2012, after a net disinvestment of 15 million ounces in 2011.

As a result, HSBC now thinks the silver market will average $34 a troy ounce next year and $32 an ounce the following year. Both forecasts are $2 per ounce higher than HSBC's previous prediction.

In addition, HSBC introduced a 2014 forecast for silver: $28 a ounce. It left its five-year forecast for silver unchanged at $25 an ounce.

As can be seen by their conservative forecast HSBC is not, in the words of its analyst James Steel, "unreservedly bullish."

HSBC believes strong growth in mine production and scrap supplies will weigh on silver prices. It is forecasting a market surplus of 138 million ounces in 2012 -- and some of the big brokerage houses are even less bullish.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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