Shortly before the end of the week, the silver bulls are attempting to reach the resistance zone of 32.50 US dollars for the third time in four weeks. They had previously failed quite clearly at this level in May. In retrospect, however, the subsequent setback to 26.40 US dollars only cleared up the overbought situation and ultimately gave the silver bulls new strength.
Accordingly, the attacks are now becoming faster and more intense. A breakout above the resistance level of around 32.50 US dollars is within reach and should result in a rapid price increase to around 35 US dollars. In addition, there are further price targets between around 37.50 and 40.00 US dollars and of course around the all-time high of around 50 US dollars. We believe a breakthrough to the all-time highs in the coming months is possible and realistic.
Silver with great catch-up potential
Although the price of silver continues to lag clearly behind the price of gold in the bigger picture, it has nevertheless been able to keep up with the spectacular development on the gold market, at least since the beginning of the year .
Overall, both precious metals have seen a price increase of around 35%. However, as always, silver shows greater volatility.
At the same time, the gold/silver ratio is above the 10-year average at 84:1. A real trend reversal in favor of silver would probably only occur once the upward trend line that has existed since 2011 in the area of around 74 has been clearly broken downwards.
As always, Silver will probably only turn on the turbo on the home stretch and then schizophrenically but also elegantly at the overtake the gold price in a schizophrenic but also elegant manner .
This typical behavior at the end of a rally in the precious metals sector has not yet been observed. Therefore, there is a good chance that the party could continue at least until the end of the year, and probably even into next spring. In the short term, the US election could perhaps bring about some profit-taking and thus a breather .
However, industrial silver demand from Asia (solar & batteries) remains a key driver of prices, particularly due to the increase in solar demand, which now accounts for around 15% of total demand.
Buyers in Shanghai are also still willing to pay a premium of around 6 percent for physical silver.
With mine supply stagnating or even declining in some areas, the slowly increasing investment demand in the West could further increase the deficit in the silver market. Currently, the holdings of exchange-traded silver funds are around 30% below their 2020 peak. But nothing attracts new investors more than rising prices!
After a daily high of 32.61 US dollars, the price of silver is now aiming for the highest weekly closing price since December 2012, once again attacking the resistance zone of 32.50 US dollars. The breakout or liberation is within reach.
Chart-wise, the uptrend is intact and the breakout from the ascending triangle of the last few weeks is underway. Fortunately, the daily stochastics supports this bullish starting position .
The oscillator also still has plenty of room to reach its overbought zone. On the downside, the rapidly rising 50-day line (30.15 US dollars) should absorb any setback and subsequently catapult prices further north.
Overall, the starting position is extremely bullish and a rise to 35 US dollars is probably imminent. In addition, the breakout should be able to push silver prices up to a level of at least 50 US dollars in the coming weeks and months.
Conclusion:
Silver - The Turbo Booster is coming
The silver market is likely on the verge of a crucial turning point that could trigger a significant upward price increase . The expansionary monetary policy of central banks and rising geopolitical tensions have led to an increasing scarcity of raw materials, especially silver, which is indispensable in numerous technologies.
The latest Futures Market Report (CoT) shows that the amount of silver futures contracts sold on the Comex exceeds more than a year of supply, indicating an impending run on physical silver. This dynamic could drive the silver price further higher and initiate a massive bull market in the silver market, similar to developments in 2010, 2016 and 2020.
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