Gold may drop to $1,100 an ounce in a year, from $1,387.20 now, Credit Suisse Group AG forecast last month. Goldman Sachs Group Inc. sees gold at $1,345 in 12 months.
Price Swings
The slump in silver, mostly a byproduct in the mining of other metals, is crimping profit for mining companies. Shares of Mexico City-based Fresnillo Plc, the largest primary silver producer, dropped 42 percent in London this year. Coeur Mining Inc., which gets about 61 percent of its revenue from the metal, slid 43 percent in New York trading.
Holdings of silver in ETPs rose 1.1 tons this year, compared with a 1,621-ton expansion in 2012, data compiled by Bloomberg show. Further gains may be curbed as silver’s widening price swings dissuade investors. The metal’s 60-day historical volatility reached an 11-month high in April as it entered a bear market, the 11th in nine years, and climbed further since. It is now at 37 percent, compared with 29 percent for gold.
“Investor sentiment will remain poor going forward, as with gold, and the real risk will come from further ETP liquidation,” said Jeremy Baker, a senior commodities strategist overseeing about $800 million at Harcourt Investment Consulting AG in Zurich. “You have some decent areas of industrial demand, but you need to see significant uptick in those areas to really see any kind of flow through, and you’re just not seeing that at the moment.”