Look for silver prices to average $19.40 in 2014

There are just too many headwinds for metals right now. The economy’s improving, inflation is low and the Fed’s talking about tightening monetary prices. While I do believe the government has flooded the economy with too much cash to avoid an extended period of inflation, that inflation isn’t coming in the near-term.

British banking giant Standard Chartered just lowered its silver price forecast by 5 percent according to Metal.com. They’re looking for the white metal to average $19.40 this year. That’s less than 2 percent below the current price for silver ($19.78 at the time of this writing).

March has been a rough month for silver with prices falling 10 percent from $22 to $19.78. Silver’s now down for the year, and Standard Chartered believes that’s par for the course in 2014. The bank says recent gains in metal prices came on “U.S. growth concerns and safe-haven buying.” Now, they believe those gains went too far, too fast.

I tend to agree. I find it interesting that silver and gold prices have continued to trend down despite the ongoing crisis in Ukraine. If that can’t generate some ongoing safe-haven buying, we’d need an all-out war to drive up silver prices and that’s something no one wants to see.

There are just too many headwinds for metals right now. The economy’s improving, inflation is low and the Fed’s talking about tightening monetary policies. While I do believe the government has flooded the economy with too much cash to avoid an extended period of inflation, that inflation isn’t coming in the near-term. Until it does (or the Fed announces some new form of QE) look for investors to put their cash elsewhere. In the interim, I’m betting on bitcoin. Check out my post Bitcoin inflation hedge: The new gold and silver.

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