Silver costs to underperform gold costs, however there's a limit – ABN AMRO

Georgette Boele, senior FX & precious metals planner at ABN AMRO, suggests that they expect silver costs to say no within the close to term and expect an additional deterioration in their outlook for international growth and international trade.

Key Quotes

“We have below accord forecasts for economic process within the eurozone and also the North American nation. we have a tendency to expect the Chinese and Indian economies to weaken similarly. Next thereto we have a tendency to expect weaker international trade. Industrial demand accounts for over 1/2 total silver demand. jewelry demand is around two hundredth of total silver demand. If {the international|the worldwide|the world} economy and global trade slow additional (we don’t expect a recession), this may sadden silver demand and also the outlook for silver costs. additionally, we have a tendency to expect profit taking in gold costs and this could conjointly drag silver costs lower.”

“So for the rest of this year, silver costs can probably underperform gold costs. however there's a limit to silver’s underperformance to gold. we expect that a gold/silver magnitude relation higher than ninety is unsustainable, that silver is reasonable, which net-positioning isn't extreme (as in gold).”

“For 2020, we have a tendency to don’t expect a fabric improvement within the outlook for international trade and within the international economy. we expect most of this may already be mirrored in silver costs tho'. In 2020, silver costs can probably follow gold costs higher once more, in the main owing to financial policy easing by central banks, and a rise within the quantity of negative yielding debt.”

“With silver costs following gold costs in Associate in Nursing setting of weak economic fundamentals, gold costs can probably surpass silver costs. From the instant that international trade and international growth begin to recover and provided central banks stay accommodative, we expect that silver costs can begin to surpass gold costs. A weaker North American nation greenback also will support gold and silver costs. this is often additional probably to happen in 2021, though.”