• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Investing Phillip Newman foresees considerable headwinds for silver prices in 2023
Investing

Phillip Newman foresees considerable headwinds for silver prices in 2023

by November 30, 2022
by November 30, 2022 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Earlier this month, the Washington D.C.-based Silver Institute published a study which found that physical demand for silver is expected to rise by 16% during 2022, creating one of the largest deficits on record at 194 million ounces.

During the previous two years, silver demand had been dented by covid lockdowns and supply chain disruptions, affecting goods such as jewellery and silverware across several major consumer countries.

Source: MarketWatch

At the time of writing, the silver spot price is trading at $21.48 levels.

One of the key drivers of the recovery has been the high demand in India owing to lower rupee prices.

Bloomberg reported that the increased appetite could be up to 80% higher compared to last year’s subdued levels.

In 2022, jewellery and silverware demand in India is reportedly up 29% and 72%, respectively.

Physical demand

Philip Newman, Managing Director for Metals Focus, an independent precious metals advisory, believes that several metrics show a robust uptick in demand.

For instance, lease rates have moved up sharply and the sudden shift upward signals higher demand for silver on the market.

The lease rate is the interest rate earned or paid when lending or borrowing silver to other market participants.

Source: Monetary Metals

Secondly, premiums on physical products such as high-grade 9999 silver, have been consistently in the range of 20 to 30 cents per dollar in the United States for much of this year.

According to the latest data from Money Metals Exchange, current premiums on the Maple Leaf issued by the Royal Canadian Mint are accounting for approximately one-third of the market cost.

One of the big international stories of the year is the ongoing drainage of precious metals from the Comex and LBMA in New York and London, respectively, which I wrote about in a previous article for Invezz.

In data published this week, Comex vault totals fell by approximately 860,000 ounces to 296 million ounces.

The quantity of silver in registered vaults fell to 34.1 million ounces, the lowest level since June 2017.

Registered products are those which are readily available to investors who want bullion delivery. 

Silver expectations

In 2023, Newman anticipates that,

…the silver market will still be in deficit; however, we don’t think the deficit will be anywhere near like what we have seen this year…thus, the pressure on Comex and LBMA should significantly ease as well.

Newman believes that this scenario is likely to materialize as global bullion imports and repatriation demand begins to normalize at some stage.

Price surge on pivot?

Given the high demand for physical silver and the rising spot price, one may expect that silver prices would be waiting to take off.

However, Newman sees headwinds for the metal continuing into 2023.

He argues that demand for silver, particularly institutional demand will rely heavily on the position of real yields and the outlook on a recession.

A potential Fed pivot in 2023 is likely to come into effect only after data prints point to falling inflation.

If inflation eases, following which rates turn or halt, real yields may still find support enough to keep institutional demand capped in silver.

In addition, as discussed in an earlier article, official rate changes take time (even several quarters) to filter through to the economy, meaning real yields could prove relatively sticky.

Secondly, if a recessionary environment intensifies, physical demand for silver tends to fall, which may further limit price action.

Consequently, Newman anticipates that silver prices will struggle and that average prices for 2023 could decline below 2022 levels.

However, he does note that institutional interest in the market remains strong, given the rising spot price in the past few months, as well as hedging properties that have seen the metal outperform key benchmark equities this year.

Source: MarketWatch

What’s next?

For individual buyers, the acute cost-of-living crisis may take precedence and important payments such as mortgages may keep demand for silver in the segment relatively muted in 2023.

With home data weakening (which I covered in a piece here), and the much-awaited jobs data to be released later this week, a Fed pivot is certainly on the cards.

However, in such an event, silver prices may not respond immediately and there may be a lagged reaction, depending on inflationary factors and economic strength in broader economies. In such a case, gold will likely respond in a similar fashion.

The post Phillip Newman foresees considerable headwinds for silver prices in 2023 appeared first on Invezz.

You Might Also Like
  • Rolls-Royce stock price forecast 2023: risks and opportunities
  • Long Strangle Option Strategy: The Ultimate Guide
  • Should you buy or sell the Dax index amid German industrial production rebounding?
  • What to expect from the eurozone economy in 2023
Share
0
FacebookTwitterPinterestWhatsapp

previous post
How IoT is improving employee welfare and safety in a manufacturing workplace
next post
FTSE 100 price forecast ahead of the last trading month of the year

You may also like

Top Hang Seng index constituents to watch in 2023

December 28, 2022

ECB Governing Council Member Klaas Knots: Interest Rate Hikes Far...

November 28, 2022

Should you buy oil given the unprecedented divergence with energy...

December 21, 2022

4 most-owned stocks by super investors

November 29, 2022

Rolls-Royce share price forecast for December 2022

November 30, 2022

Compass Inc will turn free cash flow positive in 2023:...

January 9, 2023

The 10 Best Options Trading Books

March 23, 2023

This real estate stock got a double upgrade from BofA...

January 9, 2023

Tesla stock has rebounded from a key support: should you...

November 29, 2022

Coinbase, Galaxy Digital shares rise sharply as stocks surge

December 29, 2022

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,631 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Coinbase halts NFT transfers for iOS...

    December 2, 2022

    European Gas Prices Are Up As...

    November 30, 2022

    Should I buy Intel shares after...

    December 26, 2022
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here