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What will silver prices be like in 2016? Haywood makes silver price forecasts

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It’s not unusual for investment companies to forecast prices for commodities in the upcoming year, but rarely do companies push their price predictions out as many as five years into the future. Haywood Securities did that with silver, though, in a recent research report (per Mineweb).

The Vancouver-based research firm told investors to look for silver prices to average $36 an ounce in 2012. After that, Haywood expects prices for the white metal to start a long, downward slog. Here are their predictions for silver prices over the next fiver years:

  • 2012 silver price forecast: $36
  • 2013 silver price forecast: $32.50
  • 2014 silver price forecast: $29.50
  • 2015 silver price forecast: $28
  • 2016 silver price forecast: $24

Beyond 2016, Haywood expect silver prices to settle around $20 an ounce. Those are glum predictions. And it’s important to note that Haywood’s not alone. Last week, Citigroup Inc. sent a research note to investors predicting silver prices would actually fall 10 percent by the end of 2013.

“We caution that continued keen investment interest in the metal is required for a silver price of approximately $30 (USD) per ounce,” Haywood analyst Chris Thompson noted in the report.

Our interpretation of that? Anytime the silver price is north of $30 an ounce, it’s up there because of high investor demand driven by economic uncertainty. To take our inferences further: if Haywood sees the price of silver continuing to drop through 2016, they feel like the global economic picture is going to keep getting better over the next five years. That means they’ve got a lot of faith that governments around the world will rally to embrace fiscal responsibility.

Further dampening silver prices, Haywood expects silver production will continue to hit record highs through 2016. The mined silver supply hit 716 ounces last year. Haywood expects the mined silver supply to exceed 1 billion ounces in 2016. That’s a whole lot of new silver in the face of decreased demand.

Of course, all of the numbers above rule out the possibility of an economic calamity in one or more countries or regions (something that is a very real possibility). Look for Haywood to quickly revise their numbers higher if we see a sovereign default, hyperinflation or a breakup of the Euro.

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