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1、GlobalCommoditiesPrecious MetalsSilvers golden starSilver Outlook 2020We on by GlobalCommoditiesPrecious MetalsSilvers golden starSilver Outlook 2020A Weaof29 November 2019Outlook expected to improvein1Hbyafirmstrongfinancialmarkets,andstockpiles. Investor prices volatile. A gold and ongoing and tri

2、ggered appetite for notably the While has given back a good portion of gains, remain positive. While Fed may be only moderately loose global monetaryandfiscalcouldaidsilverpricesFXstrategists forecast a firm is to be greatest High stocks may also present to said, still look for to gain and an price

3、of for 2020 a range ofIndustrial demand sluggishThe impact of trade risks, although good for investment demand, has weighed on industrial silver consumption notably electronics, although photovoltaic demand is rising. Mild global industrial growth in 2020 should aid demand. Jewelry offtake is rising

4、 notably in India as it wins market share from gold. Mine supply is likely to edge up in 2019 and 2020, before easing later in the next decade. Recycling supply should stay constrained, as low prices reduce incentives to reprocess silver. Our forecast for modest supply/demand deficits this year and

5、next support our mildly bullish outlook.Investor demand should recoverExchange traded fund (ETF) holdings have surged, evidence of growing investor demand. Meanwhile, Comex positions have also grown. We see more room for ETF holdings to rise and net long positions increase, should economic risks ris

6、e. Coin demand is recovering from low levels. Bar demand appears more stable. Low prices and greater retail and institutional demand should stimulate coin and bar demand in 2020. Investors silver demand may remain strongly linked to gold prices, which encouraged demand in Q3. Firm gold prices going

7、forward is key for higher silver prices, in our view.James SteelChief Precious Metals Analyst HSBC Securities (USA) Inc. HYPERLINK mailto:james.steel james.steel+1 212 525 3117HSBC silver price forecasts (average) 2019f 2020f 2021f Longterm* (USD/oz)OldNewOldNewOldNewOldNewSilver16.27unch16.2517.471

8、8.45unch20.00unchNote: *Long term = five years. Year-end 2019 and 2020 forecasts are USD17.25/oz and USD18.50/oz, respectively. Source: HSBC forecastsDisclosures & DisclaimerThis report must be read with the disclosures and the analyst certifications in the Disclosure appendix, and with the Disclaim

9、er, which forms part of it.Issuer of report: HSBC Securities (USA) IncView HSBC Global Researchat:https: HYPERLINK / /Executive summarystandstorallymodestlyin2020onaindemand,butandafirmUSDshouldcontainWe update our model and a ofthis followed by a 9moz deficit in2020We to trade in a for 2020our pric

10、e forecast to for theHard goingSilver lost ground to gold earlier this year with the gold:silver ratio moving out to 93USD strength is negative for silver, but any rise in financial volatility or geopolitical risk may aid pricesSilver has traded in a wide USD14.25-19.65/oz range so far this year. Af

11、ter trading on the defensive for much of 1H, silver gained on improved, if volatile, investor sentiment in 2H. Silver prices have loosely tracked gold, but until recently silver has tended to lose ground to the yellow metal in recent years (see chart 6), resulting in a widening of the gold:silver ra

12、tio to 93.4 last July, a record level. This is up from a low of 64.2 in mid-2016. Like its sister metal gold, silver has faced and continues to face powerful negatives. These include lower industrial offtake due to global trade frictions and record high equity markets. Weakness in other commodities

13、as a result of trade concerns also weighed on silver (see chart 4). Among the most powerful negatives for silver as well as for gold has been the strong USD.Still, investor sentiment improved in late summer following golds rally. Net long positions on the Comex rose and substantial investor demand p

14、umped up ETF holdings. Much of this was due to a strong rally in gold and a narrowing of the gold:silver ratio (back to a low of 80 in early September). Global accommodative monetary policies aided both gold and silver, as did rising trade tensions and geopolitical risks. Silver prices have since wa

15、ned, constrained by diminished chances for a fourth rate hike this year, a pullback in gold prices, and high warehouse stocks.Ongoing USD strength and high stocks are the principal headwinds faced by silver. This could constrain rallies and limit silvers upside. Uncertainty concerning industrial dem

16、and is also a negative. That said, widely accommodative monetary policies globally, a clear recovery in investor demand for coins, bars, and notably ETFs, and most importantly our expectations of a firm gold price, are likely to propel silver higher in 2020. Additionally, any further rise in financi

17、al market volatility or geopolitical and trade risks, may be positive for prices. Silver is also benefiting from higher jewelry demand, notably in India where imports have been robust.1. Silver pricesPrice (USD/oz)Date4Q 2018 average14.551Q 2019 average15.572Q 2019 average14.883Q 2019 average16.9820

18、19 low14.3729-May-192019 high19.659-Sep-19Nominal all-time high49.5128-Apr-11Source: Refinitive Datastream, HSBCInvestor sentiment improvingThe surge in investor demand is most obvious by examining the jump in silver-ETF holdings. After ending 2018 at 516moz and following some weakness in 1H 2019, h

19、oldings jumped to a high of 639moz in September and remain high at 619moz as of writing. Meanwhile, Comex net long positions, after starting the year at 289moz and staying sluggish for much of 1H, turned higher beginning in the summer, jumping to 423moz net long by mid-September. Since then net long

20、 positions have eased to 333moz. Although volatile, investor demand has improved and based on expectations for firm gold amid ongoing accommodative monetary policies globally, and economic and political uncertainties, we believe both ETFs and net long positions will see further, but more modest accu

21、mulation for the rest of this and next year.2. Silverprice (USD/oz)3. Silver trades directionally withgold6050403020100Jan-04 Jan-07 Jan-10 Jan-13 Jan-16 1002006050403020100Jan-04Jan-09Jan-14(LHS)Gold2,0001,8001,6001,4001,2001,0008006004002000Source: RefinitivDatastream,HSBCSource: Refinitiv Datastr

22、eam ,HSBCSupply/demandWe update our supply/demand model (see exhibit 5), which considers 10 components of the physical silver market, including mine supply, recycling levels, industrial consumption, photographic and jewelry demand, and coin and ETF purchases. Our model also incorporates available da

23、ta from the Silver Institutes 2019 Interim Review compiled by Metals Focus. Our model suggests the market will run deficits of 87moz this year and 9moz in 2020.Quarterly silvercorrelations1.21.00.20.0-0.2-0.4-0.6-0.8Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016

24、Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019-1.0Q1 2014Q2 2014Q3 2014Q4 2014Q1 2015Q2 2015Q3 2015Q4 2015Q1 2016Q2 2016Q3 2016Q4 2016Q1 2017Q2 2017Q3 2017Q4 2017Q1 2018Q2 2018Q3 2018Q4 2018Q1 2019Q2 2019Q3 2019GoldEUR-USDWTICrudeCRBCopper 500Source: Refinitiv Datastre

25、am, HSBCWhile we look for a recovery in PV demand this year, but broader economic concerns are restraining industrial demandOnthesupplyside,weexpectslightdeclinesinmineoutputthisyearandonlymodestincreases in2020.Mineoutputmaystayconstrainedintotheearlyyearsofthenextdecadebeforeturning lower later th

26、at decade. Scrap supplies are limited by low prices and difficulties in collecting electronic waste. Meanwhile, industrial demand, which fell in 2018 due mostly to a pullback in photovoltaic offtake, may stay sluggish. While we look for stronger PV demand to continue, broader concerns about electron

27、ic and other industrial demand associated with the trade tensionsandeconomicuncertaintyarerestrainingdemand.Muchofthenewelectronicsdemand has been coming from the auto sector, but here demand is now slowing. Coin and bar demand, which slumped in 2017, put in a mild recovery last year, and has reboun

28、ded in 2019 and may stay positive. Jewelry demand is also on the upswing, notably from India where imports have risen, boosted by the latest slide inprices.Silver supply/demand model(moz)201120122013201420152016201720182019f2020fMine production757795840877885883869855853856Government sales1278000000

29、0Old silver scrap233216193175167165167167169173Hedging12-47-35178-192-305Total supply1,0149711,0061,0691,0601,0291,0381,0191,0221,034FabricationIndustrial and decorative508451461456490490516514511518Photography62534644413835343333Jewelry162159187193202189196204210215Silverware42404652575258656972Phy

30、sical investment, coins, medals bar272241300282310213156166181185Exchange traded funds-2524-630-17433-810520Total fabrication1,0469441,0401,0271,1009829619831,0041,023Total demand1,0219689771,0271,0831,0259649751,1091,043Market balance-732942-2347444-87-9Market balance ex-govt stock sales-19-42142-2

31、347444-87-9Price average (USD/oz)35.1231.1523.7919.0815.6817.1417.0515.8116.2717.47Source: Silver Institute Metals Focus, GFMS Refinitiv, HSBC forecastsWe raise our 2020 average price forecasts to USD17.47/oz from USD16.25/oz. We leave our 2019, 2021, and long-term average forecasts unchanged at USD

32、16.27/oz, USD18.45/oz and 20.00/oz respectively.Gold vs silver gains (losses) indexed to 1 January201660%60%50%50%40%40%30%30%20%20%10%10%0%0%-10%Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 May-18 Sep-18 Jan-19 May-19 Sep-19-10%Source: Refinitiv Datastream,HSBCSilver(LHS)GoldInvestor sentimentb

33、y A is be beInvestor demand likely to increase in 2020USD gains have proved a powerful negative for silverA rise in populist sentiment may support silverAfter a lackluster first half, silver prices shot higher in Q3, before easing again in recent weeks. Silver moved off the year-to-date low of USD14

34、.25/oz touched on 28 May, to a year-to-date high of USD19.65/oz by 9 September. The market has since fallen back but has been staying above USD16.50/ozandmaintainingahigherrange.Investorsentimentimprovedin2H.Silverstrength mayhavealottodowiththehighergoldprice.Silverlooselytrackedgoldatalagformuchof

35、the year,butgenerallylostgroundtotheyellowmetal.Morerecently,however,silverhasperformed better relative to gold. Since the summer, silver has tended to benefit in the aftermath of strong gold moves, enjoying a secondary wave of investor buying. The silver rally to USD19.65/oz corresponded with the g

36、old:silver ratio moving to a one-year low. Silver retreated below USD17/oz, however, as gold fell back below USD1,500/oz, but we believe the outlook for the remainder of 2019 and 2020 is positive. Silver has notable room to the upside and a reasonably modest downside risk, in our view. Silver prices

37、 are roughly in the lower end of the range of the last 10 years and are well below the average of USD21.25/oz for that period. Also silver has spentrelativelylittletimebelowUSD15/oz,inthatperiod,alevelweseeasgoodsupport.Populism can prop-up silverOur outlook for silver is linked to our positive view

38、s on gold. Elevated geopolitical and trade risks raise risk-off investor sentiment and are supportive of quality asset buying for both metals. In Bordering on reality: Nations, regions, populism and the “left behind” (25 June 2019) Stephen King, HSBCs Senior Economic Adviser, examines regional prosp

39、erity in a range of economies. He points out that while some regions have prospered, others have fallen behind, including regional disparities in growth in China and OECD nations. Should these differing economic experiences persist, Mr King argues that politics of populism which often seeks to blame

40、others for peoples discontent may grow, leading to more in the way of protectionism and isolationism. Growth in populism and protectionist policies raises economic uncertainty and promotes quality asset buying of precious metals, including silver. Protectionism often leads to trade disputes. We disc

41、ussed in Gold Update: Going for gold (9 October 2019) that trade tensions and reduced trade flows positively impact the demand for gold. The situation as it pertains to silver is more complex. Weakening trade flows tend to support gold prices and by extension silver by stimulating investor demand. B

42、ut trade tensions also exert a negative impact on silver in other regards. More than half of physical silver demand is absorbed by industry andShould equities weaken or financial market volatility rise, silver may be a beneficiaryFed policy has been generally supportive of silver in 2019manufacturin

43、g, notably electronics. Electronics have been at the forefront of trade disputes. Consequently, trade flows in electronic goods have been curbed and industrial and economic confidence, much of it pertaining to electrical and electronic goods (especially in China and other major electronics producers

44、), has weakened. This has reduced the industrial demand for silver as investment demand has accelerated.While risks, notably trade risks, as well as accommodative monetary policies are positive for investor demand, equity market strength, has been a net negative. Silver has generally performed slugg

45、ishly when compared with equity markets, which explains some of its weakness as investors favored equities (see chart 7). However, should the equity rally tire, or equity market volatility rise, we believe silver, as well as gold, may benefit.Interesting changesMonetary policy, notably but not exclu

46、sively US policy, has a direct impact on precious metals prices, including silver. The US Federal Reserves policy stance shifted earlier this year towards a “low for longer” rate stance; a policy that remains broadly intact. This shift helped boost silver prices, which had dropped to USD14.44/oz at

47、the last Fed rate hike in early December 2018. In FOMC minutes: Monitoring the present and planning for the future (20 November 2019) HSBCs US economist Ryan Wang analyzes the minutes of the 29-30 October FOMC meeting and finds that policymakers generally viewed the economic outlook as positive and

48、that their views had changed little since the previous meeting in September. In light of this backdrop, most FOMC policymakers appear to be on board with a wait and see approach to any future changes to the federal funds rate following the 25bp rate cut in October. But as pointed out in FOMC Multi-

49、Asset Reaction: Wait and see (30 October 2019), this does not mean yields will be static. Mr Wang says they should continue to trade in a moderate range, reflecting the day-to-day shifts in the economic outlook and investors flows. But he says the economic data would have to shift significantly, poi

50、nting to faster or slower growth, to change our forecasts. Importantly for silver also, Mr Wang reaffirmed that HSBCs forecasts for US 10-year yields of 1.5% at the end of 2019 and 2020 remain unchanged. We view these forecasts as moderately supportive of silver.In Global Economics Quarterly: Puttin

51、g the air back in (26 September 2019), HSBC chief economist Janet Henry outlined the case for easier global monetary policies. Global growth has declined to the slowest pace since the eurozone crisis and ongoing trade tensions and other geopoliticaluncertaintiesraisethepossibilityofitslowingfurther.

52、Inflationisalsostilltoolowand policymakers are trying to put the air back into the global economy. Aware that their ability to respondtotheslowdowninglobalgrowthandlowinflationismoreconstrainedinthefaceofthis downswingthanduringthelastslowdown,centralbanksaroundtheworldcontinuetorespondby easingmone

53、tarypolicy.Greaterfiscalstimulusgloballyisimminenttoo,saysMsHenry.Ms Henry also states that while monetary policy is no “cure all” and cannot revive the parts of the economy that are being most affected by the trade tensions. She cautions that over time persistently low interest rates could even low

54、er growth potential by supporting weak companies. This may mean that fiscal policy has to take more prominence. A range of fiscal stimulus measure have already been announced across the globe. In a growth-deficient world any short- term fiscal support to aggregate demand is welcome. But Ms. Henry ma

55、kes the point that if fiscal stimulus policy is not designed properly, then instead of leading to longer-term growth it may simply lead to higher budget deficits and debt-to-GDP ratios, and risk the re-emergence of debt-sustainability concerns.In Fixed Income Asset Allocation: Double bluff (13 Novem

56、ber) HSBCs Global Head of Fixed Income Research Steven Major states the Fed may have to cut more in the future if the impact of the most recent rate cuts is limited, meaning that it will eventually have to move back towards zero to be truly accommodative. Indications that the Fed intends to keep rat

57、es unchanged do not help, says Mr Major, as markets will have to figure out what this really means. Mr MajorsaysThe prospect for greater fiscal stimulus globally is silver supportiveA firm USD presents the greatest likely headwind to silver ralliesthe Fed has consistently failed to hit its inflation

58、 target of 2% on a symmetrical basis. Since the explicit inflation target was introduced in January 2012 the mean inflation rate has been 1.6% and the prints in recent months have been barely above this, says Mr Major. For the 2.0% inflation target to be symmetric the Fed has to communicate that it

59、will be willing to see inflation go higher in the future. This is potentially good for silver. Fed policy is much more than just “on hold” says Mr Major; the Fed might even cut rates after inflation has surprised on the upside.What ramifications can global monetary and fiscal policies have for silve

60、r? We believe monetary policy is globally sufficiently accommodative to at least support silver at around current prices. A “lower for longer” Fed rate strategy as outlined by HSBC macro-economic research should support silver, but monetary policy is not as bullish for silver as it was earlier in th