Covid-19 hits Silver 1 OZ 999 NY (XAG=X) to a ten-year-plus low
The coronavirus pandemic has hit silver to a ten-year-plus low, according to the Refinitiv GFMS annual Silver Market Review 2019, which includes provisional supply and demand estimates for 2020.
After rising to a five-month high by late February, the silver price experienced a calamitous fall in March, as precious metals got caught up in a broader market sell-off amidst the deteriorating virus outbreak.
Silver lost 30% of its dollar value in the first three weeks of March, trading at around the $12/oz level, the lowest in ten-plus years.
Total physical demand was down 2% last year to 1 035.1-million ounces (32 196 t), driven lower by a drop in silver used in industrial applications and jewellery, slightly offset by a pick-up in retail investment.
Industrial fabrication fell 4% to 554.9-million ounces (17 259 t), dragged down by the global economic slowdown and trade conflict between the US and China.
The largest volume decline was recorded in the electronics segment, where demand for silver fell from 8.6-million ounces (267 t), and other industrial segments, where demand was 5.3-million ounces (164 t).
The marked decline in the number of ethylene oxide facilities commissioned last year resulted in silver demand from the ethylene oxide industry falling 28% to 3.9-million ounces (122 t).
Demand from the photovoltaic (PV) sector fell for the second year running, dipping in 2019 by 3% to 74.2-million ounces, on silver thrifting in PV modules, even as global photovoltaic installations continue to rise.
Demand from the jewellery sector slipped 1% to 210-million ounces (6 532 t), driven by lower offtake in Asia, particularly China, where jewellery fabrication tumbled 11% to the lowest level since 2003.
While structural factors and a shift in consumer preferences had been weighing on the domestic market, the economic slowdown and trade tensions put a major drag on jewellery demand last year. Meanwhile, Indian demand rose slightly to a record high level, driven by strong demand in the first half of the year thanks to increased wedding days and a lower silver price. Silverware fabrication posted a 3% year-on-year drop to 59.2-million ounces (1 840 t), driven by lower offtake in India.
The silver price averaged $16.21/oz in 2019, up by 3% from the previous year, with some interesting shifts observed during the year. The performance for most of the first half was low, with the dollar price plunging $15/oz in April. The second half of the year saw the silver price soar by 18%, breaking through the $19/oz mark in early September for the first time in nearly three years.
On the supply side, mine production declined by less than 1% to an estimated 853.7-million ounces (26 552 t), with losses in South America and Oceania being slightly offset by higher output in Europe and North America. Scrap supply rose to a five-year high of 160.3-million ounces (4 986 t), up by 6% from the previous year, with higher prices stimulating scrap flows across the major markets.
It forecasts that bars and coins will rebound by 24%, partly driven by a first-quarter buying frenzy across all the major markets following silver’s price plunge, as well as a renewed investor interest in safe havens later in the year once global financial markets stabilise.
It expects lower 2020 industrial fabrication, with the rapid spread of Covid-19 disrupting supply chains globally and threatening to drag the global economy into downturn.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 15.38.
The projected upper bound is: 15.76.
The projected lower bound is: 12.97.
The projected closing price is: 14.37.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 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 41.0592. This is not an overbought or oversold reading. The last signal was a sell 2 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 44.51. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 7 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 66. This is not a topping or bottoming area. The last signal was a buy 9 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 5 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAG= closed up 0.435 at 14.435. Volume was 8,900% above average (trending) and Bollinger Bands were 189% wider than normal.
Open High Low Close Volume___
13.923 14.530 13.860 14.435 29,437
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 13.99 16.40 17.01
Volatility: 55 60 38
Volume: 2,944 589 147
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 15.1% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into XAG= (bullish). Our trend forecasting oscillators are currently bearish on XAG= and have had this outlook for the last 24 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.
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