Silver bullion rallied but struggled to hold above $16 per ounce on Friday, December 16, in London as gold bounced $10 from yesterday’s new 40-week lows against the US Dollar.
Losing 4.7% from last Friday’s finish, silver doubled the weekly loss in gold bullion – its first weekly underperformance in four.
The largest bullion-backed ETF, the SPDR Gold Trust (NYSEArca:GLD), yesterday shrank by another 7 tonnes – just less than 1 day’s global gold mining output.
Overtaking gold’s gains in April, silver prices added 48% from New Year at early July’s peak of $20.71, while gold bullion peaked with a gain of 28% at $1375 per ounce.
Silver has since cut its 2016 gains to 14% – well over twice gold’s 5.6% year-to-date return – fixing just above $16 per ounce at midday in London, bullionvault reports.
“We see an increasing risk of investor selling,” says Swiss private bank Julius Baer of gold, silver and the other precious metals, “and prices may well undershoot heading into next year.
“Due to its very high dependence on investment demand, gold is most susceptible…We estimate that a 100-tonne decline in the holdings of physically backed gold products lowers prices by around 3.5%.
“If holdings returned to the levels seen earlier this year, prices could drop another 15% from today’s levels.”
Western money managers cut their exposure to gold bullion prices again on Thursday, extending the worst run of exchange-traded trust fund outflows since the 2013 crash.
Taking the GLD’s holdings down to 842 tonnes as shareholders liquidated 0.8% of the stock, that cut its 2016 addition below 200 tonnes from last New Year’s Eve, down from 340 tonnes at the early July peak following the UK’s Brexit referendum vote.
The largest silver ETF also shrank as investors sold out on Thursday, with the iShares Silver Trust (NYSEArca:SLV) needing 10,534 tonnes of bullion backing at the close – equal to some 38% of annual world mining output.
