Source: Zhitong Finance
Spot silver continued to hit a three-year high, approaching $29.
Spot silver continued to hit a three-year high, approaching $29. Compared to gold's glittering return over the past year, silver's gains may be somewhat bleak. However, since this month, the increase in silver has surpassed that of gold. This is because investors are seeking an alternative asset to take advantage of economic resilience, withstand increased geopolitical risks, and prevent rising inflation.
Like its gold counterpart, silver also enjoys a reputation as a safe-haven asset. Furthermore, during the economic expansion period, silver will also benefit from the increase in the use of silver in industrial applications from chip manufacturing to solar panel production. At the same time, silver, like other precious metals, is still supported by limited supply. Currently, the amount of silver used each year still exceeds the amount mined.
Therefore, despite continuing tension and high inflation in the Middle East, the economy remains surprisingly resilient, and it is not surprising that investors continue to seek silver prices.
“Silver appears to benefit from two major sectors: investment/consumption and industrial demand, which each account for 50% of total silver demand,” Heraeus analysts said in an interview.
Judging from the gold/silver ratio, which indicates the price relationship between the two metals, silver is also very attractive. Currently, an ounce of gold can buy investors about 83 ounces of silver, while the average rate over the past 30 years has averaged around 67 ounces.
As a well-known chart pattern, the “golden fork” signal usually appears before a new uptrend begins. The rise in silver this time is also in line with this. After the 50-day moving average crossed the 200-day moving average to form a gold fork signal, the price of silver rose sharply within the 11-month trading range.
In the future correction process, investors should pay attention to the $26 price. The silver price at this price may find buying interest near the trend line at the top of the range, which has moved from the previous resistance zone to a support zone. To determine an upward target, investors can measure the dollar distance between the upper and lower trend lines in this range and add this distance to the breakout point. For example, an increase of $3.75 over $26 indicates that the potential profit area is around $29.75.