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$SI_F Silver Looks Range Bound In 2013

Many banks still have a strong outlook for Silver in 2013. In reviewing Scotia Bank, UBS, HSBC and Citigroups estimates, I have found that these banks are still bullish on Silver moving into 2013 but there are many questions regarding the silver moving forward.

Scotia bank is bullish on its outlook for silver in 2013. The bank is bullish with some caution. They indicate that “The situation in Silver is complex”. In their outlook for silver 2013 the bank states “there is a large supply surplus and that is likely to be the case for the foreseeable future.” Even though there are new uses for silver the bank does not think this will allieviate the surplus issue. “Although there are new applications for Silver that are likely to become large consumers of the metal, we do not feel these new uses will cause the market to move into a supply deficit for a number of years still.”

Even though there is some caution with silver, Scotia Bank is bullish on metal. In the silver outlook for 2013 the bank states “As the concerns over the West’s financial system persist, the market is likely to remain broadly bullish for Silver as a complement to Gold”. Scotia Bank believes that Silver will remain range bound between $28/oz and $36/ oz. The bank also believes that if Silver can break though the  $36-$40/oz barrier then prices could read $45/oz.


UBS, 2013 silver forecast is $36.80/oz. In an article published by Kitco The bank cites “Silver is set to outperform in the current accommodative policy environment, especially as risk sentiment remains generally buoyant,”. The bank also states “Barring any major risk-off event, we expect this trend to continue in 2013 against the backdrop of QE (quantitative easing) from the Fed and loose monetary policy from other key central banks.”.

The bank also looks to gold for lead in the direction of silver. The bank states “For day-to-day direction, silver is likely to look toward gold for guidance. Ultimately, investor demand will drive silver more-so than fundamentals such as supply and fabrication demand, UBS said. “The price is therefore likely to be more buoyant than what may be suggested by supply and demand fundamentals,”.


HSBC bank recently revised their forcast on silver for 2013 and 2014. In an article published by TD Ameritrade the bank has revised its forcast to the upside. “For 2013, the analysts expect silver to reach $33 an ounce, up from an earlier estimate of $32 an ounce, while they see prices around $31 an ounce in 2014 compared to an earlier forecast of $28 an ounce”. The bank is citing four main reasons for the upgrade. They are “higher industrial demand, steady investor appetite for hard assets, strong coin and bar purchases, and a bottoming out of jewelry demand. The bank also states “Greater industrial silver consumption is one of the most compelling arguments in favor of higher prices,”.

In an article posted by the ETF Daily News they indicate that Citigroup believes Silver isn’t expected to perform as well as gold in 2013. Citigroup believes that Silver will average around $31.00/oz. In 2014, the bank estimates silver to average $26.50/oz. The bank believes over supply is the main culpret for the decline in Silver moving forward.
Based on the four banks listed predictions for Silver, 2013 looks to be a range bound. The estimated ranges are varied as Scotia bank believes that if Silver breaks the $40.00 barrier then Silver will go to $45.00/oz while Citigroup believes that Silver will average around $31.00/oz in 2013 and decline in 2014. In a different statement Scotia bank implied that “Silver looks to be range bound in 2013, and should bounce between $28/oz and $36/oz. The Banks all state that there is an oversupply of the metal, but the opinions vary on how much will be consumed and the effect on the price this consumption will have.

Chart sourced by Finviz

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