The fluctuating prices of precious metals in recent months has been a cause of exasperation on the part of investors. Last week, silver prices continued to ricochet between $19.52 and $19.72, presumably waiting to settle on a number pending the outcome of sanctions the U.S. placed on Russian entities as a result of the Ukraine crisis. Silver and gold prices typically benefit from geopolitical strife, but in this case,Ukraine is not doing silver investors any favors.
According to an analyst at Hongkong and Shanghai Banking Corporation (HSBC), investors cannot rely on Ukraine to keep the prices of silver from sinking. In fact, silver prices were saved at $19.28 on Tuesday, but then dipped down to $19.17 the following day. As the news about Ukraine escalates and neutralizes, these prices will continue to see highs and lows that are unfavorable to silver investors.
This flux has been the focal point for CPM Group, a market research and financial advisory firm based out of New York. The company reports that silver is expected to close the year out below last year’s surplus. Their research also found that investment in coin and bar demand fell sharply by 43% in 2013, the lowest since 2008. Silver experienced a similar low, with prices sinking 24% from the previous year.
The problem is that even though experts are projecting a higher level of silver sales in 2014 because of the low cost, it may not be enough to significantly raise the pricing on this metal to satisfy investors. In other words, the investment demand does not meet the rising supply of silver, according to CPM analysts.
Despite these statistics, there are some international companies that are backing silver investment. Metal Focus, a London-based business, is projecting a continued increase in silver demand in the European market. The company claims that demand has spiked in the automotive industry, as well as in electronics. More silver is being used per car in Germany as per Metal Focus’s report, giving the metal a more positive global outlook.
Additionally, there are a number of domestic buyers that invest in silver American Eagle bullion coins. These coins have been manufactured by the U.S. Mint in Denver, Colorado, for the last 28 years, and contain at least one troy ounce of 99.9% pure silver. These coins are relatively inexpensive, and could help increase investor profits as the demand for silver declines this year.
Even still, the reports remain glum for silver investors, and there is little chance for it to reach a favorable high. With these predictions, it is likely that the highs and lows silver has seen in recent weeks will resume their fluctuation regardless of the situation in Ukraine.