Although gold prices appear to have found a floor in the market, silver has not been as lucky, analysts at Barclays say. “Silver prices have bounced back above $17/oz, but in our view, despite short-term sentiment improving, prices are yet to find a solid floor,” they say. The analysts explained that looking at Exchange-Traded Products, investment demand for silver has held up better than gold in 2014, but it could only be a matter of time before investors sell their unprofitable silver investments. From a price perspective, Barclays says that they don’t expect to see more redemptions of gold ETPs unless the price breaches $1,000 an ounce. “In contrast, the bulk of silver ETPs are currently cash negative, with the most of the metal held in trust accumulated above $20/oz representing the late money investment,” the analysts say. “ETP holdings have been much more robust even as prices have fallen. In our view, this continues to make silver vulnerable to further downside, particularly as there have been a limited number of production cutbacks in light of lower prices.”
