NEW YORK (Commodity Online): Silver prices have been depressed since the crash in May 2011 and many investors have begun to wonder when prices might start to head north.
And they might have to wait further, says a Standard Bank report which argues that Chinese silver inventories are sky high and as long as industrial demand fail to deplete those reserves, prices are not expected to rally above $35/oz
"As long as China does not import silver, the price is unlikely to rally on a sustainable basis”, the report states. China currently has enough silver inventories to meet 15 months of demand "and we believe that China’s inventory needs to decline to at least 10-12 months of fabrication demand in order for demand-pull pressure to build. Until then, we expect Silver Price rallies to fade above $35 per ounce”
Current silver demand from China is weak as indicated by declining premiums for the metal. Shanghai premiums are down from $5/oz last summer to below $0.50/oz in the current month.
The report suggested that China could come back and restock its silver supplies in Q3, 2012 which could provide enough support for prices to trade above $35/oz and test $40/oz.
