Silver ETFs Surge Monday on April's World Bank Report

Silver futures and ETFs are making considerable gains on the first day of the new trading month, despite predictions from World Bank for lower gold prices in 2021 and 2022.

In its April commodity report, the international financial institution said that it expects gold prices to average this year around $1,700 an ounce, and that the lustrous metal could drop even lower, to $1600 in the next year.

Ironically, the World Bank’s gold prediction arrives as gold attempts to find muster sufficient positive momentum to drive through $1,800 an ounce. June gold futures last traded at $1,793.70 an ounce, up nearly 1.5% on the day.

Silver meanwhile, is surging higher on Monday, with front month futures climbing 4.59% to breach the $27 level, and add $1.19 per ounce to the industrial metal.

A Tale of Two Metals

The World Bank’s commodity report notes that while gold may see lower prices going forward, other commodities are doing exceedingly well, as investors continue to champion an economic recovery.

“Almost all commodity prices now exceed their pre-pandemic levels, and those of some commodities, notably metals, are well above their previous levels—copper prices were nearly 50 percent higher in March 2021 relative to the end of 2019. The recovery has been driven by the improving global economic outlook, aided by significant monetary and fiscal stimulus in advanced economies, and steady, although uneven, vaccination rates,” the analysts said in the report.

Looking at the whole metals group, the World Bank predicts a 30% jump this year, with a correction in 2022 as the global economy starts to normalize. Meanwhile, the analysts project that gold prices will decline 4% this year due to factors like climbing bond yields and weakening demand.

“Higher real yields make gold less attractive to investors. Gold-backed exchange-traded funds holdings have also fallen sharply in recent months, and central banks have reduced gold purchases. Physical demand is recovering from a substantial decline in 2020 but remains well below pre-pandemic levels,” the analysts said.

A Silver Jump?

There is good news for gold’s little brother silver, however. Analysts predict silver prices to surge 22% this year, thanks to higher industrial demand.

“Prices were lifted by a rebound in industrial demand (electronics, autos, and solar power), which accounts for more than half of silver consumption (compared to less than 10 percent for gold). Investment demand has also been robust, with investors holding net-long positions since mid2019,” the analysts said.

For investors looking for more upside in silver, there are a number of options available, including the Sprott Physical Silver Trust (PSLV).

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