In its special report on silver, Ventura Commodities has identified increasingly higher production costs and boost in Asian demand as the two fundamental factors that could create major impact on Silver prices in 2014. The special research report on Silver published by the commodities firm, notes that the above factors may determine the price movement of Silver during the year.
According to estimates, Silver mining costs during Q3 2013 had averaged at USD 21.39 per ounce. Spot Silver prices closed at USD 20.25 per ounce yesterday. This implies that the white metal is trading at a price lower than its cost of production. The report sees very less chance for the prices to continue in the same range. Many mines which fail to break-even on the existing high output costs may stop functioning. This would squeeze the supply of silver on the market, which in turn would push the prices higher.
The Silver demand in emerging markets, especially India and China improved significantly during 2013. Ventura Commodities indicate that if the demand continues to remain robust in 2014, the Silver prices may witness a sharp jump. Forecasts of rising industrial demand in 2014 may also boost Silver prices in 2014. Earlier, Thomson Reuters GFMS report had forecast a rise of 6% in industrial demand during 2014. The Silver industrial demand is expected to touch 511.6 Moz during the year. The rising industrial demand for the metal is likely to attract more investors to Silver, the report says.
The report concludes by saying that geopolitical and economic events may play more prominent role in determining Silver prices in the near term. Also, the changes in mine supply situation may also impact Silver prices.