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« GT Advanced Technologies’ Plan to Rewire Solar Modules | Main | ECB steps up battle against low inflation, slow-moving economy »
Tuesday
Jun102014

Will Import Taxes on Solar Panels hamper Silvers ability to rally?

Background

Investors are disillusioned by the inability of silver prices to rise to higher ground as silver enters its 4th year of looking anything but sparkling. As a silver bug I think that we have suffered long enough but finding the ignition that will set silver on fire is proving to be difficult. There are a myriad of factors to consider before making an investment in silver such as: supply and demand, price manipulation, industrial usage, jewellery, investment, various metrics such as the gold/silver price ratio, etc. The list is almost endless so today we will look at just one of them which we think is important; the imposition of import duties on solar panels.

US Import duties on Chinese solar panels.

On 03 June 2014 the United States imposed new import duties on solar panels imported from China. The Commerce Department has taken a stance in that they are of the opinion that these panels were produced with the aid of government subsidies which gives Chinese manufactures the upper hand when competing with the home based manufacturing industry.

Back in December 2012 the US imposed duties of about 30 percent on solar panels made by Chinese importers. However, the Chinese managed to dodge this imposition by having the production of the cells carried out elsewhere, such as Taiwan.

The value of these imports from China increased to around US$3.0bn in 2012, provoking the US to impose duties averaging about 31 percent on panels emanating from China at that time. Further anti-flooding duties are also expected to be announced next month so this figure of 30% could go even higher.

This is important as according to the Silver Institute:

 silver is a primary ingredient in the photovoltaic cells that catch the sun’s rays and transform them into energy. 90 % of crystalline silicon photovoltaic cells (the most common cell) use silver paste and over 100 million ounces of silver are projected for use by solar energy in 2015.”

If these import taxes are successful in their application then the corresponding price increase could be a deterrent to the user who may well want to consider alternatives to solar energy. In many parts of the world it is a marginal decision to use solar panels and such a sudden increase in price could be the nail in the coffin for them. Should investors turn away then the estimated requirement of 100 million ounces could be severely dented. A lot will depend on just how ‘green’ the purchasers are, some will go solar almost regardless of the cost as green energy forms an important element of their personnel objectives. However in the competitive world of business these price increases may be too much to bear and the installation of solar panels may be shelved until they become more competitive on a life cycle costing basis.

The counter balance to this argument is that China is suffering from the tremendous problem of pollution and they themselves may have to increase their own exposure to solar energy in order to achieve some respite, putting pressure of silver prices.

Chart Depicting Silvers rise and fall

 

This 4 year chart shows silvers meteoric rise and subsequent fall back to where this rally started. The downward trend looks to have flattened out into a consolidation pattern with a break out, either way, on the cards. The RSI is heading north out of the oversold zone suggesting higher prices in the short term and the STO has bounced indicating higher prices in the short term.

Conclusion

I am a silver bull, but not a perma-silver bull, as I believe there is a time to be fully invested and a time to take shelter in the form of cash. At the moment we are not prepared to adopt a Cavalier approach to silver investment or their associated producers especially now as we into the relatively inactive summer period for the precious metals sector.

The lion’s share of our portfolio is in cash and we admit to finding it difficult being patient as we wait for the real bottom to form and the opportunity to buy at rock bottom entry levels. We are aware that this down trend has existed for almost four years and has tested the patience of the most ardent bulls, however, that’s not a reason to hit the acquisition trail with gusto.

Got a comment, fire it in, especially if you disagree, the more opinions that we have, the more we share, the more enlightened we become and hopefully the more profitable our trades will be.

 

Go gently.

 

The miners have started 2014 very well indeed on the back of rising gold prices, so the question is; is this the real deal or another head fake? Is the bottom really in? Could there be a final capitulation just ahead of us? Will the summer doldrums take the PMs lower?

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Reader Comments (2)

nano silver - anti microbial work socks and linoleum. Water filters, silver solder, silver oxide batteries. Protective coating for hospital gowns, gloves, door knobs etc. Welding supplies, solar panels, big screen t.v., touch screen,
jewelry, money, water filters. But you can always use fiat currency to start a warm fire. And when you polish silver it reflects the true light.

June 12, 2014 | Unregistered CommenterLoneRanger

GT Technologies (GTAT) has a new process that reduces the amount of silver needed in a solar panel by 80%. This process will probably be widely adopted by the PV industry. Just think what that will do to silver demand in this area.

http://tinyurl.com/m94...

GTAT also has received $500 million from Apple to build sapphire screens for upcoming Apple producst. If you want to make money, forget silver and look at GTAT. Just my opinion.

June 12, 2014 | Unregistered CommenterO

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