A: I am moderately bullish on gold and silver prices this year notwithstanding the strengthening US dollar. Analyst consensus prices average about US$1235 per oz gold and US$18.18 silver for 2015. From a fundamental point of view, total gold supply has been falling in recent years due to reduced scrap recycling. The only new gold supply since 2012 has been sales from the gold ETFs and that trend recently reversed itself from net sales to net purchases in January 2015. On the demand side, India posted a record year and China had a near record year of gold imports in 2014, and we can assume most of that gold disappeared into jewelry, coins and bars so not available for resale or lease, unlike the gold inventories held by central banks and bullion banks. From a technical point of view, gold broke the previous 3 ½ year down trend in January and moved up on strength so I think the bottom is in and a two steps forward, one step back pattern will dominate gold this year, with support around US$1,180 and resistance levels up to US$1,420.

Silver is a bit different because it is both a currency and a commodity whereas gold is simply a currency and store of value. Furthermore, most new silver production comes as a byproduct of gold, copper and zinc mines rather than from primary silver producers and those other companies are quite happy to hedge their future silver production. Fundamentally, silver supply rises each year due to rising mine production but there has been and will continue to be a total supply/demand deficit because silver demand has been rising faster due to rising industrial usage for electronics, solar panels, and many other emerging new high tech uses in addition to investment demand. Remarkably, the silver ETFs have seen no net sales since this market correction began in 2011, which suggests that silver investors are longer term than gold investors! Technically, silver also broke its downtrend and established an uptrend in January but it is subject to global economic forces so is lagging gold as shown by the high silver/gold ratio. Once again, I think the bottom is in, and a volatile two steps forward, one step back pattern should also dominate silver this year, with support around US$15.80 and resistance levels up to US$22.20.

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