Silver rally to keep coin bargain hunters at bay: Report

Soaring silver prices are changing the market's 2016 landscape as bargain-hunting coin buyers step to the sidelines, and futures and options participants take the reins, said Erica Rannestad, senior analyst of precious metals demand at GFMS.

"It's this renewal in the short term of interest in precious metals as a safe haven," Rannestad said.

"Last year, while we saw record coin and bar demand, this year we're seeing the money managers in futures and options come back, and we're seeing the ETPs (exchange traded products) increase once again. Holdings in ETPs are up 35 million ounces." Presenting the World Silver Survey 2016 on Thursday, which was produced by Thomson Reuters' GFMS, Rannestad said the spot silver price was forecast at an average of $15.90 an ounce in 2016, up 15 per cent from the end of 2015, with the price to average $16.80 an ounce in the fourth quarter.

However, this is down nearly 12 per cent from Monday's high when prices reached a 15-month peak at $18 an ounce. This followed a 16 per cent surge in April, its strongest monthly performance since August 2013, as the dollar fell and silver prices played catch-up to gold, which just saw its biggest quarterly rise in nearly 30 years.

"This is a total shift in the investment landscape going from a bargain buying environment to a price-driving environment, because it's really the short-term futures and options markets that have an influence in price," Rannestad said.

Global coin and bar demand in 2015 reached a record 292.3 million ounces, up 24 per cent from 2014, as spot silver prices fell to the lowest in more than six years.