Prices Expected to Return to U.S. Buying Parity London, Feb. 26.
Last year would have been singularly colourless but for the outbreak of activity in December, occasioned by fears of the future course of the American silver policy, declare Messrs. Samuel Montagu and Company in their annual bullion market report.
Despite the set-back at the end of the year, however, silver was less unfortunate than other markets, although the apathy was attributed, in some quarters, to the general weakness of commodities, especially cotton.
After dealing in detail with the events of the past year, the review discusses the outlook for silver in the following terms:
Liquidation of bull commitment and the opening of many bear positions doubly strengthened the technical position, for not only were the majority of operators now short, but substantial offerings which brought about this reversal of position were absorbed, practically all for cash delivery, by America, thus reducing the available stocks in London.
The American policy continues to be the dominant influence, with Indian demand next in importance.
With regard to the former, it seems reasonable to assume that America desires a comparatively stable world silver price, and is, therefore, prepared to absorb large amounts, both of accumulated stocks and newly. mined silver; while, as regards India, it is to be noted that stocks in Bombay at the end of 1937 were the lowest for some time.
In conclusion, Messrs. Montagu look to prices to return to, rather than rule at or above, the American buying parity until the existing bear positions are closed. Afterwards, they expect the market to find its normal level, probably a shade under parity, but at a point at which it can readily move in either direction by the incidence of any substantial volume of demand or offerings.—Reuter.
Text read from the printed page and cleaned; old type leaves the occasional error.