The iShares Silver Trust (NYSEArca: SLV) and the ETFS Physical Platinum Shares (NYSEArca: PPLT) are among the precious metals exchange traded funds that have been drubbed this year and some analysts see even more downside ahead for platinum and silver prices.
Of course, the strong dollar is a thorn in the side of commodities, which are dollar-denominated. Not to mention the other headwinds facing marquee commodities, such as gold and silver. Silver, like gold, is losing ground among investors seeking a hedge against market volatility or a store of value against inflationary pressures, reports Christian Berthelsen for the Wall Street Journal. Many market participants are anticipating the Federal Reserve to hike interest rates for the first time in almost a decade, which will diminish the attractiveness of holding assets with no yields.
On the supply side, silver miners are finding less deposits and producers are expanding into new projects, which suggests that silver could be in shorter supply ahead. Additionally, there is the money valuation angle. As central banks keep dumping money into the world economy, paper money becomes less valuable and hard assets, like silver, become a better store of wealth.
Last year, silver mine output grew just 5% to 877.5 million and there are fears such tepid production will not keep pace with demand from industries such as solar and technology. [Silver ETFs Looking Good]
“HSBC lowered its 2015 silver price forecast to $15.60 from $17.05 per ounce and its 2016 forecast to $16.90 from $18.25. It lowered its 2015 forecast for platinum to $1,126 from $1,170 per ounce and its 2016 forecast to $1,235 from $1,350. The bank reiterated that it expects gold prices to bounce back to $1,205 per ounce by the end of the year on emerging market buying,” according to the Economic Times.