After years of depressed prices as a result of short selling[1] and the distraction of cryptocurrencies, the silver price is currently showing improved strength – even while it continues to be buffeted on all sides by contrary winds. The white metal has recently benefitted from a dramatic surge in interest, with prices climbing to levels not seen since the silver bull market of 2011-12. The surge has been driven by a number of factors; a turn in the commodity cycle, increased demand from ETFs and industry, and more recently a new army of young, aggressive, media-savvy retail investors[2]. We see this market returning to a peak over the summer as industrial demand, hedge funds, investors and bullion dealers fight over the remaining supply[3]; and growing premiums force a re-assessment of the present price discovery system.
A year that has lifted the lid on the silver market
A lot has happened in the silver market since our major article (GEAB 135) and our update on the precious metals (GEAB 145). 2020 started dramatically with the Covid-19 market crash taking silver prices down to record lows at 12 dollars an ounce[4], along with everything else! Once things settled, the outlook for silver looked dire for a time as market sentiment wavered between the perma-bulls and the establishment rhetoric that sought to keep people out of precious metals by keeping the prices low[5]. However, this situation could not last as first gold took off, and then the silver bull market finally got under way in July. Once unleashed the price rose steeply from 19 to 29 dollars in only 4 weeks, before consolidating around 27 dollars. In September a short pull-back brought prices back to their rising channel.
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