Silver prices today are hovering around $14.28 an ounce, down nearly 10% for the year. Silver linings have been hard to come by lately in this precious metal market.
On Nov. 11, the silver price had declined for 10 trading sessions, a rare event in the markets. The $4.5 billion iShares Silver Trust (NYSE Arca: SLV) has followed silver, also down for 10 straight days.
But interestingly, despite weakness in silver stocks, they have actually shown more resilience than silver itself over the past week.
And if we look at the fundamental demand side of the silver market, we see it's an area where there are encouraging signs for the silver price forecast...
Silver Prices Today vs U.S. Dollar
Last week, silver prices were hit by ongoing negative sentiment combined with sustained strength in the U.S. dollar.
Silver prices dropped about 5.6% last week, going from $15.10 to $14.25. This was in sympathy with gold, where silver took its cue.
According to research from Sentimentrader.com, silver has only declined in 10 straight trading sessions twice before, once in 2000 and again in 2008. In those cases, over the following few weeks, silver gained 4% and 30%, respectively.
Action in silver stocks has been encouraging, however, when compared to the silver price. Here's how the two compare if we look at the last week in trading:
As you can see, silver stocks, as represented by the Global X Silver Miners ETF (NYSE Arca: SIL), only fell 1% last week, while silver, represented by the iShares Silver Trust (SLV), was down 3.5%.
While the time frame is admittedly very short, it still begs the question whether silver stocks are potentially leading a possible turnaround in silver.
And on the fundamental demand side, some interesting news has come from the Silver Institute...
Bullish Signs for Silver Prices
The Institute recently hosted a conference in Washington, D.C. A subsequent report highlighted some remarkable facts regarding the precious metal.
Michael DiRienzo, executive director of the Silver Institute, told delegates that in 2014, industrial demand for silver represented 56% of the overall demand side. Thanks to silver's reflective and conductive qualities, the metal is superior to others in many applications.
Other participant speakers said silver was considered irreplaceable as an electronics conductor used in our everyday smartphones, tablets, and computers. As well, they noted that the solar industry was undergoing tremendous demand growth. And another area with surging demand is the production of ethylene oxide, a chemical required in the production of numerous everyday products like polyester fiber. Silver's germ-fighting properties are also claiming increased uses in medical applications. The Institute said that silver is "inherently antimicrobial and controls hundreds of pathogens."
So as you can see, the list of practical and even essential applications for this precious metal is growing.
From just the fundamental side of demand, silver is being used and consumed at an ever increasing pace.
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From the supply side, it's increasingly likely that silver trading at a price well below what it costs to produce (estimated around at least $17) is a recipe for lower supply.
And that should help contribute to higher silver prices into 2016.
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