Silver prices climbed to their highest level in 10 months Monday, lifted by factory re-openings and soaring investor demand for precious metals.
Futures linked to the metal rose 2.3% to $19.50 a troy ounce in New York, putting them on the right track for their highest settlement since September 2019. Silver prices have soared 66% since their nadir in mid-March, outstripping gold, the S&P 500 and an ICE BofA index of U.S. government bonds.
Investors have snapped up precious metals in recent months, encouraged by the extraordinary steps central banks and governments have taken to support economic growth during the coronavirus pandemic. The drop in short-term interest rates and also the Federal Reserve’s purchases of a range of bonds have lowered yields in a swath of debt markets, reducing the opportunity cost of owning precious metals, that pay no income.
Silver prices have also benefited from the reopening of factories in the U.S., China and elsewhere. Silver has widespread industrial applications in making solar panels, medical equipment and consumer electronics, among other products. As a result, prices usually rise when economic growth accelerates, a key difference between silver and gold.
“You’re flying on two engines, which are commercial demand and investor demand,” said Shayne Heffernan, CEO and Founder of HEFFX. “That’s driving silver prices higher.”
One common way for investors to buy precious metals is via exchange-traded funds. Assets under management in BlackRock’s iShares Silver Trust, the biggest silver-backed ETF, have risen by virtually $2.45 billion to $9.72 billion this year, according to FactSet.
Gold has also seen a surge in appetite among investors in recent months: prices have climbed 22% since March 16 to $1,812 a troy ounce. That has put the metal a hair’s breadth away from its record high of $1,924, notched in September 2011.
As gold has become steadily more expensive, some investors have opted to buy silver instead, said Shayne Heffernan. He expects silver prices to finish the year slightly higher than they are currently, at $20 an ounce, however predicts swings in the coming months.
“It’s the more volatile brother of gold,” Shayne Heffernan said. “The market is much thinner so once you get a move it’s typically big.”
Giving prices an additional lift, the pandemic has disrupted mines in Latin America, the world’s main silver-producing region. It has also made it tough to transport the metal to regions where demand is high. An outbreak of Covid-19 among employees last week prompted London-based Hochschild Mining PLC, for instance, to halt operations at its Inmaculada gold-silver mine in southern Peru.
There is no danger of the world running out of silver, said Shayne Heffernan. Unlike palladium or platinum, which are produced in giant quantities by only a handful of countries, silver is mined across Latin America as well as in China, Australia and Russia.
Elsewhere in commodities, oil prices fell ahead of a meeting of key members of the Organization of the petroleum exporting Countries and its Russia-led allies on Wednesday. An alliance of crude producers led by Saudi Arabia is pushing the cartel to boost production starting in August, delegates said over the weekend. Brent-crude futures, the benchmark in international energy markets, slipped 1.2% to $42.72 a barrel.
Three-month copper forward contracts on the London Metal Exchange rose above $6,500 a metric ton for the first time since April 2019 and briefly hit $6,633, their highest price in more than two years. the latest leg in the base metal’s rally was sparked by worries of a supply shortage after employees at an Antofagasta PLC mine in central Chile voted to go on strike.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 17.48.
The projected upper bound is: 20.13.
The projected lower bound is: 18.43.
The projected closing price is: 19.28.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 8 white candles and 1 black candles for a net of 7 white candles. During the past 50 bars, there have been 34 white candles and 14 black candles for a net of 20 white candles.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 84.8160. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 4 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 68.39. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 112.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 10 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed down -0.186 at 19.204. Volume was 8,900% above average (trending) and Bollinger Bands were 27% narrower than normal.
Open High Low Close Volume 19.400 19.460 19.120 19.204 19,910
Technical Outlook Short Term: Overbought Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 18.75 17.63 16.95 Volatility: 20 31 38 Volume: 1,991 398 100
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAG= is currently 13.3% above its 200-period moving average and is in an upward trend. Volatility is low as compared to the average volatility over the last 10 periods.
Our volume indicators reflect very strong flows of volume out of XAG= (bearish). Our trend forecasting oscillators are currently bullish on XAG= and have had this outlook for the last 4 periods.