Silver trading introduction
In the ongoing certainties caused due to the pandemic, people have started relying on investments made in gold and silver, which would provide some certainty to their lives. However, out of the two, silver remains more approachable and a better and convenient option to spend in.
In the past months, the prices of white gold have risen by approximately 18%, while the prices of white meat have risen by approximately 3%.
However, going by the market trend, it is expected that the price of silver would also soar shortly.
We can now look at the current price fluctuations of silver, what factors have been affecting it, and those that will affect it now. According to market experts, the price of silver is expected to rise.
To say that 2020 has been a unique year would be an understatement. We saw the world in upheaval. The medical crisis hit the entire globe and shook the socio-political dynamics of various countries. The value of the US dollar and crude oil fell exceptionally while commodities like gold and silver enjoyed bullish trends. Gold and silver price rise promoted investors and traders to think beyond the conventional investment options. Many investors looking to diversify their holdings while keeping the risks at the minimum switched to these two assets.
Gold created quite a stir in the investment world last year, but silver also proved to be exceptionally promising. If you plan to invest in silver or wish to know how it performed in 2020, keep reading this article. You will get an idea about how much silver is projected to go up and future silver price predictions. Read along to make informed decisions regarding future investments.
Silver price today – silver chart
2020 Silver Price Analysis
Silver had a promising 2019 where it culminated the second half of the year at $18/ounce. The white metal rose to $19 per ounce in February of the following month, but this metal game changed for the worse during the global health crisis. The COVID-19 lockdown prompted many exits, forcing many traders to close their positions. This led to a drastic fall in the prices of silver. The price of silver hit $11.74/ounce on March 18, 2020, the lowest ever price in the last decade.
However, the dip in the prices did not remain the same for long. It is often seen that people trust more in precious metals than money during global crises. This is why prices of gold skyrocketed in 2012. The same happened with these two metals in the middle of 2020. The prices of both silver and gold reached a new high. By July, silver was comfortably sitting at $24 per ounce. In summer, as the manufacturing activities started to recover, demand for physical metal also increased. Demand for these metals, along with investment demand, made silver shine brighter.
While these metals were enjoying a new high, the USD’s value fell against several major currencies. This is evident via the DXY Index chart. This further encouraged people to invest in other commodities.
The DXY Index Chart
After a record low in February 2020, silver managed to power through and created a record high of seven years on 6th August 2020 when it was priced at $30/ounce. By mid-September, the prices fluctuated again, and the range was from $25 to $29.
This could very well be seen as a countereffect created by the strengthening USD. After August 31, 2020, when the currency bottomed out, it soon started to pick up. Subsequently, on 23rd September 2020, the white metal fell to $22.68/ounce. The metal had already shed approximately 16% by the 25th of September 2020.
Throughout October, the cost of silver remained between $23 to $25 per ounce. This was also when the financial markets braced themselves for what could be deemed the most decisive elections from technical analysis, the US presidential elections. The DXY chart shot up by 94% by the end of October 2020. Generally, the USD’s strength is not good for precious metals; silver managed to hold its ground.
2021 Silver Price Forecast
The silver price forecast shows the possibility that the price goes above $89 at the end of the year 2021. 10-year silver price forecast shows the possibility that the price goes above $290 in the next 10 years. Projections are made based on interest rate projection, technical analysis, silver supply, and demand projections.
Is the Price of Silver Going Up?
Yes, the silver price is going up because of the following factors:
- The real Interest rate is negative
- Inflation is rising
- Huge silver demand. Silver will be critical to the solar power generation market over the next 10 years.
- Technical analysis shows a bullish pattern on daily, weekly, and monthly charts.
Silver fundamental analysis – Interest rate and inflation
While inflation rising and real interesting rate falling, silver rising as more investors see precious metals as a better investment opportunity than bonds investing.
An interest rate is a percentage charged on the total amount you borrow or save. Nominal interest rate refers to the interest rate before taking inflation into account. Inflation is the rate at which the value of a currency is falling, and consequently, the general level of prices for goods and services is rising. The real interest rate is calculated as the difference between the nominal interest rate and the inflation rate.
Silver and green initiative
Silver represents raw material for photovoltaic (PV) cells, solar panels’ building blocks, and leading clean-energy technology. Silver will be critical to the solar power generation market over the next 10 years and important in renewable energy production.
Silver long-term technical analysis
In the last 50 years, silver is on the moderate rising trend. If we analyze the last 50 years’ chart, we can see the cup and handle pattern that projects a strong bullish trend. After a strong rising trend during the 2008 crisis, now price is trying to break the historical maximum.
Wall Street Silver Analysis
Let’s find out what Wall Street analysts feel about the future of this commodity.
At the end of October 2020, a report was published by analysts at Metals Focus. According to them, the chances of silver touching $30 per ounce are highly likely. They predicted that silver would see an upward surge after the US presidential election. They were certain that the economy would receive large-scale stimuli from the government irrespective of the results, and there will be fresh fiscal policies. These two variants, along with continuous lockdowns, do not look promising for recovering the economies.
The forecast made by Metals Focus shows that silver will remain bullish in the long term. They, however, are still warning the investors about the near-term volatility. According to them, the economic recovery rate will be slow in the future, and unemployment is likely to elevate further. These things will weigh on silverware demand and the recovery of industries.
There were several predictions made by other institutions as well. For example, CIBC bank predicts that the prices of silver will reach $32/ounce in 2021, sliding back to $31/ounce in 2022 and $30/ounce in 2023. It is still too early in 2021 to see if these predictions stand the test of time or not.
According to the CIBC analysts, the government debt is still on the rise, and the interest rates are also on the lower side. These factors, along with geopolitical uncertainty, translate to an appreciation of metal prices.
Citi analysts are also quite optimistic about the future of the metal. The bank predicted that the metal would jump to $40/ per ounce within a year. Their predictions are based on the fact that there will be a huge surge in industrial demand, and investors will be more willing to pay.
Citi analysts expect that the investor demand for precious metals will remain on a higher side throughout 2021 and well into 2022. This is because the concerns regarding vaccine efficacy, devaluation of currencies, rising global debt, and uncertainty regarding equity and bond valuation and take-up rates will remain in most cases. Their technical team also believes that the rate of silver can reach as high as $50/ounce or even $100/ounce in 2021.
Goldman Sachs (GS), too, has faith in the year 2021 as being a promising time for commodities. They recommend going long on gold, silver, copper, Brent Crude Oil, and US natural gas.
Capital Economics came up with another prediction related to the prices of silver. Their analysts predict that gains for silver will remain moderate in 2021. According to these analysts, the prices of silver will rise in conjunction with the prices of gold. However, the rise will not be as drastic as others have predicted. They believe that silver prices will reach $25/ounce at the end of 2020 and $27/ounce at 2021. So far, their predictions seem likely.
JP Morgan has a different opinion than the rest. Their silver prediction is the opposite of what others believe. According to them, it will see a downward trend in 2021.
After considering a plethora of forecasts made by different yet reliable online forecasting resources, Wallet Investor stated that the commodity would probably reach as high as $26.5/punce by the end of 2021 and appreciate by October 2025 to sit comfortably at $31.5/ounce.
Silver Market Volatility
In general, ascertaining any asset’s price requires a lot of analysis, and still, the answer is never absolutely accurate. Given the current crises, this has become an even unpredictable task. In addition to the global pandemic, other factors can also influence the price of an asset. For example, the US presidential elections in 2020 made the financial market, especially the value of the USD, highly volatile. Secondly, the COVID-19 cases are not flatlining globally, adding to economic anxiety and making economic recovery seem like a slow and distant dream. Many countries keep enforcing strict lockdowns as well.
These economic and political uncertainties hint that investors will continue to put their faith in precious metals like gold and silver as they are often seen as global currencies. This means that silver prices will continue to enjoy support from the buyers.
Another aspect that needs to be highlighted is silver as both a precious and industrial metal. The economies have started to open up gradually, and industrial activities, while still slow, are gaining momentum. This will increase volatility in the silver market. This can also mean that while the prices may not see a sudden plunge this year, there can be limited availability of silver for industrial purposes as people are buying it for their haven.
The drop and hike in silver prices and Covid 19
The price of silver has fluctuated quite a lot across time and space owing to various factors. The metal reached its premium stage in April 2011 when it was sold at $49.21 (£39.01, €45.57) per ounce caused on account of the ongoing eurozone crisis as monetary inflation.
However, this peak was brought down after a point, and for many months now, the price of silver has been revolving around the value of $20 per ounce.
After the peak of 2011, the other peak silver witnessed was in 2019 when the prices soared approximately 15%, and the market experts pretended that the price would continue to soar in the coming future. In September 2019, the value of silver was raised to $19.50 per ounce, and the value at the end of the year was $18 per ounce.
The financial markets then underwent a shock caused by US military bases and the Iranian military. This led the financial investors to run after safe-haven assets, which led to the metal hiking past the fixed mark of $18.83 maintained for about 4 months. However, once the tension between the two nations eased down, the price of silver went down again to its previous low maintained at $17.81.
This was then followed by the low seen due to the global pandemic of Covid-19, which affected all the global markets to hit rock bottom. The price of silver also shed 38% to the point that it was the lowest in 11 years seen in March. The investors became skeptical, and some of them, in fact, quitted their positions to stand in favor of cash.
Due to the growing risk aversion and the reduction in industrial production, silver faced increased volatility being an industrial metal. The spot price of silver went down to $12 per ounce, which was the lowest it reached since the year 2009. However, over the next few weeks, the metal price recovered slightly to get back to the level of $15 per ounce for trading.
The fluctuations in the price of the silver metal surprised a lot of investors, with the price ending the month of May at $18.50 per ounce driven by the forces of high demand for the safe asset and the recovery in industrial consumption. The metal further fluctuated to reach $18.63 per ounce in July.
With this much fluctuation in the price of silver, it becomes difficult to ascertain the future it would hold as an investment.
Silver price research before investing
To be a smart investor and ascertain your investments’ future, you must look into the silver prices’ factors before investing.
The massive spread of coronavirus has caused the likelihood of a global recession to occur. However, it is also expected that with the opening of the economies after the Covid-19 lockdown, there would be a spike in demand for the metal.
It has been predicted by the World Silver Survey conducted by Metals Focus for the Silver Institute that the physical investment in silver in the form of silver bars, as well as bullion coins, could undergo another year of stellar growth. The investment growth has been forecasted to experience gains this year to a rise of 16% leading to a five-year high as the investors would look forward to a safer form of investment.
However, as per the report, another prediction of the metal’s mine production is going down to 5% at 797 million ounces in 2020. Moreover, the market surplus is expected to increase 53% from 31.3m ounces in 2019 to 14.7m ounces in 2020. This could be one important factor in the silver prices in the future and the recovering demand.
Another important driver causing a change in the price is the ongoing market policy. It was stated by the US Federal Reserve in June that, according to them, the rates would remain at 0-0.25% until 2022. With a strong weighing on the US dollar, the environment was conducive to supporting the prices of gold and silver.
Another thing to consider while considering the silver prices is the rollout of the 5G telecom network. If the rollout happens well, the demand for metal would be found in semiconductors for network equipment, consumer electronics, and semiconductors. As has been found in the report of Silver Institute on Silver’s Role in a Future 5G Connected World, a whole new range and demand of silver applications will be created.
The future predictions of silver prices from reliable online and offline sources
The global pandemic has led many investors to step forward and invest in silver as a reliable asset. But can we be sure of the fruitful results of this investment?
The pandemic has made it extremely difficult to predict anything at all. It was stated by the founding partner of Metals Focus, Philip Newman, that the predictions being made are significant to run the market; however, these would be the most unpredictable times infused with uncertainty. They put the figures together to generate a prediction based on necessity, but they realize how unprecedented these statements might turn out to be.
The silver price projection by Metals Focus has predicted the metal’s price to go over $20 per ounce later in the year, as has been elucidated in the statement that said, once the prices of gold reach a soaring high, the prices of silver would follow an exceptional rise outperforming gold. An analyst of the organization further added that according to the people would continue to invest in silver. The reason that they found underlying this assumption was the minimal opportunity cost that would be incurred on carrying gold and silver. They assumed that the investments made in silver would continue based on the meager policy rates and unexpected liquidity injections put up by the central banks. As they believe, this would ultimately result in a rotation from stocks and bonds to an investment in silver.
The same bullish outlook has been predicted by another forecasting website, the Economy Forecast Agency, which said that the price of silver would be at $22.30 per ounce by the end of the year 2020. However, their further prediction says that this price would fall below the $20 mark in 2024.
It was stated by David Smith of the Morgan Report (during the online MoneyShow event that took place in June), who also believes in the concept of falling supply, and rising demand would indicate price growth that the grades have been found following a downward trend in the past 10 years. In fact, the rates have dropped approximately 50% considering the tonnes that originate from the ore as against the amount that is dug out from the ground, which has led to an impact on each silver mine there.
He further added that, according to him, there would be a lot of buying and selling that would take place with these assets. He also predicted that silver will witness a soaring high, which has always been unprecedented and can never be expected, with it reaching a price figure of three digits in the coming few years.
However, providing us with a different outlook altogether, Wallet Investor, an online forecasting service, believes that the metal price would remain flat by the end of this year at $18.26 per ounce. They further stated that the price would experience minor fluctuations and remain below the $20 per ounce level until 2025.
ABN Amro also exhibited certain cautiousness while predicting the silver prices in their statement, which said that they expect the prices of silver to fall massively due to certain weaknesses, which might also reduce the investments being made in silver.
They also stated that the trend between now and three months from now could also vary. One of the factors that could ruin the silver market could be the rising tension between China and the United States of America. The net result that they anticipate is a fall in the prices of silver caused due to the risky environment as well as the falling demand for the metal. However, it was also made clear that in the long run, they expect the position of the metal to ameliorate with a possibility of outstanding gold as well.
Lastly, the analysts at BMO have reduced silver to have the average rate of $17.60 per ounce this year, continued by the rate of $18.50 in 2021.
Should You Invest in Silver?
Silver represents one of the metals that we bought this year. In 2021. we projected silver gain in the next several months, and we see an interesting investing opportunity.
However, if there is one thing that you will certainly get in the financial market, it is uncertainty. Investing in silver is no different. No one can give you any guarantees. Most financial analysts’ reading predictions prove that silver will remain bullish this year and for the time being. However, given the current market situation and the global crisis, every financial market is highly volatile right now. This makes predicting tougher, especially when we are talking about long-term investment.
Before you make any investment, analyze the latest market trends, check the facts, do technical analysis, and follow the experts’ news and opinions.
While most people invest long-term in precious metals, if you are unsure about that but still want to capitalize on this volatility, you can invest in CFDs. This will allow you to leverage both positive and negative fluctuations for your benefit. If you think that the prices will rise, you can take a long position. If you think otherwise, you can take a short position. Keep yourself updated with the market trends and how the world is dealing with the pandemic. The final decision rests with you.
Like we know, no financial market ever gives us a guarantee of profit while investing in them. Going by the analysts’ idea, investing in silver completely might not be the best investment made shortly. However, it might be an excellent long-term investment considering the trend.
If you are not too sure of making a long-term investment, you might invest in contracts for difference, also called CFDs. It can help you occupy various positions, thereby benefiting both low and high price fluctuations.