Barclays: Investor Positioning Appears Supportive For Silver

Barclays Capital says silver investor positioning looks supportive for a metal otherwise burdened by record mine supply. Analysts estimate global coin demand hit a record 3,800 metric tons in 2011. However, holdings in exchange-traded products posted net outflows of 786 tons for the year. Further, Comex silver speculative interest dwindled from roughly 40,000 lots in February to around 7,000 by end of the year, its lowest since April 2003. “While prices lacked the investment support to be driven higher in H2 11, it does mean that investor positioning now is much cleaner, and an uptick in demand can drive prices higher from the floor that has been established,” Barclays says. “Thus, given our positive view on gold, we expect investment appetite to be supportive of silver prices but, should it ease, we would expect prices to remain volatile until they find physical support on the downside, which is likely to be closer to where prices started the year.” For 2012, Barclays looks for silver to average $32.50 an ounce, saying this would be marginally lower year on year, but “retaining the ability to recapture the $40 mark.”