Hi Ho Silver Away

Gold reached a milestone in its quarter-of-a-century bull market when the price eclipsed the $2,750 per ounce level. The 1980 high was $875 per ounce. Adjusted for inflation, that price would be around $3,500 for gold in 2024, which could be an upside target for the world’s leading precious metal.

Monthly gold volatility is around 10.04%, while its precious sibling, silver’s monthly price variance metric, stands at 24.46%. Silver prices tend to be 150% more volatile than gold prices. While the gold rally has taken prices to more than three times the 1980 nominal high, silver remains far below the 1980 and 2011 peak prices. However, at $33.90 per ounce, silver is making upside progress and is at its highest price since late 2012.

Silver’s penchant for volatility and break above a technical resistance level could mean an explosive rally is on the horizon.

Silver breaks above technical resistance

• The continuous silver futures chart highlights the rise to $34.485 per ounce in October 2024.
• Silver traded at its highest price since November 2012.
• Silver’s trend has been higher since the March 2020 pandemic-inspired $11.64 per ounce low.
• Silver’s price has nearly tripled.

Upside targets in the silver futures market

• The first upside technical target is at the October 2012 $35.445 per ounce high.
• The August 2011 $44.275 peak is the next upside technical resistance level.
• Silver traded to a $49.82 high in April 2011 and a record $50.36 peak in January 1980.

Fundamentals support higher silver prices

• The Silver Institute reported a 184.3 million ounce supply-demand deficit in 2023.
• The Institute forecasts a 3 million ounce deficit in 2024.
• Silver demand for electronics and photovoltaics (solar panels) is rising.
• When the demand is higher than supplies, prices tend to move higher.

Watch the herd, as investment demand is the most significant factor for silver prices

• The critical factor for the path of least resistance of silver prices is investment and speculative demand.
• Gold and silver are the world’s oldest means of exchange, and gold prices have reached new record highs above the $2,700 per ounce level in 2024.
• Silver is a more volatile metal than gold because of its speculative demand when trends develop.
• A herd of investment and speculative buying in the current bullish environment could increase the deficit and cause prices to move dramatically higher.

The ETF products that will follow silver higher or lower

• The most direct route for a silver investment is the bars and coins available through precious metals dealers and financial institutions.
• The iShares Silver Trust (SLV) is a highly liquid ETF product that invests in physical silver bullion.
• The GX Silver Miners ETF (SIL) and the ETFMG Prime Junior Silver Miners ETF (SILJ) are diversified senior and junior silver mining ETF products. Silver mining shares often outperform the metal on a percentage basis during rallies and underperform during price corrections.
• The Physical Precious Metals Basket ETF (GLTR) has significant exposure to silver and owns physical gold, platinum, and palladium.

Silver’s technical break to the highest price since late 2012 could be the beginning of a substantial rally that challenges the 2011 and 1980 highs. Silver is a volatile metal that tends to follow gold, which has already risen to a record nominal high.

Thanks for reading, and stay tuned for the next edition of the Tradier Rundown!