Forex Analysis & Reviews: 16.09.2020 - Silver's discreet charm: the...

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16.09.2020 09:16 AM

Silver's discreet charm: the less, the more expensive

There are fewer and fewer reserves of white metal in the modern world, so in the long term, the market will feel a shortage of it. According to experts, the lack of silver will provoke a rise in prices for it, and the owners of the metal will benefit in a few years.

According to David Smith, an expert on the precious metals market, investors have now a great chance to capitalize on the growth of silver. The analyst calls it the "chance of a lifetime," which occurs every few years. He is confident that the white metal will overcome the $ 30 mark per ounce, ensuring further growth in the mid-term.

Many experts consider the $30 per 1 ounce mark to be an important resistance level towards which the silver is currently aiming. Today, it is trading near $ 27.19 - $ 27.20 per ounce, moving very slowly towards the next highs. There is sometimes a feeling that the price of a precious metal stands still for a long time, but this is a deceptive impression. The increase in the value of silver occurs almost in gradual steps, but an upward trend is present.

Moreover, D. Smith said that if the barrier of $ 30 per ounce is overcome, silver will grow rapidly. If it fixes at this level within a few days, it will be able to continue the upward trend. In the event of such a development of events, the expert is sure that many investors and large funds will begin to increase their positions in the indicated metal.

A key role in the further growth of the price of the "lunar" metal is played by its undervaluation. Some analysts and traders treat silver with a slight disregard, as if they look down on it, considering it only an industrial metal. However, this position is in the hands of investors in the white metal, as it will help to make good money on further price increases. Experts remind that due to the active use in industry, silver is gradually disappearing from the market, and its amount will be minimal in a few years.

An important factor affecting the price of white and yellow metals (silver and gold) is the level of supply and demand. Experts consider high industrial demand to be the vector of the silver price that determines its further direction. In this regard, silver is much lower in price than the gold one, but with a total shortage in the world, it is able to catch up with it.

A significant disadvantage of using silver for industrial purposes is the impossibility of its secondary processing. Unlike gold, it cannot be returned to the secondary market. According to the observations of specialists, it is impossible to extract any components from finished silver products in the event of recycling. Over the past 20 years, 11.5 billion ounces of silver have been used in global industrial production. During this time, about 3.5 billion ounces returned to recycling, that is, the remaining 8 billion ounces (or 70% of the total precious metal) were forever lost to the market.

According to analysts, the market should prepare for a reduction in the global volume of silver. In such a situation, it will noticeably rise in price and, no matter how strange it may sound, it will become worth its weight in gold. Experts believe that the price of white metal may exceed the price of yellow, if the balance of supply and demand in the precious metals market remains the same.

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*Disclaimer: The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.