I'm talking about silver…
You see, silver is used in three main industries:
• Jewellery (30% demand) (Bracelets, necklaces, rings, coins etc…)
• Industrial (50% demand) (Electronics, solar panels, 5G tech, silverware & electric vehicles)
• Investment as a form of a safe haven
And now we're seeing more cars on the road, factories opening their doors and investor sentiment is picking up.
As this continues, we will see a rise in industrial and investment demand for silver in the coming months.
In today's article, I'm going to discuss three main reasons why I expect the silver price to rally over 35% and how we can profit from it.
Why a second wave of COVID-19 will help silver’s price rally
Let’s go back to March 2020.
Silver at the time was trading at a bleak $12.00. This is also the time when the first wave of COVID-19 was spreading at a rapid rate around the world.
Then on 15 March, the FED decided to cut the interest rate to almost zero percent.
They also announced they would purchase $700 billion in bonds and securities to try and stabilise the financial markets amidst the COVID-19 era…
Since interest rates have been cut, this has lead to investors taking their money out of lower yielding assets like (savings, banks and bonds) and into more rewarding and safe-haven assets like gold and silver.
And the results? Well we’ve seen an insane climb for silver of over 58% from $12.00 up to $19.00 since.
So why I am I telling you this?
Well as economies and countries started to open up, we have seen a second wave of COVID-19 infections.
I mean, South Africa is already in the top 10 countries with the most infections… And we haven’t even peaked yet!
The Fed may need to drop the interest rates even further and inject more money into the economy to keep it afloat. This will put further pressure on the U.S dollar which will help dollar-priced commodities pick up.
And that’s the catalyst silver needs to fuel its next price rally.
Even the Silver Institute believes there’ll be a 5% fall in silver production, a 7% drop in industrial demand but a 16% rise in physical investment demand for silver.
In other words, demand is set to outstrip supply. And that’s all silver needs for a price rally.
Silver is up for the year and investors are piling in
During the COVID-19 period, conservative investors are constantly looking for anywhere to safe-guard their money. If you look at just about any financial market you’ll see they are down for the year.
Cotton, S&P500, JSE, Australia, Hong Kong, France, Germany – you name it!
Not silver! Silver is up for the year and is on a strong uptrend.
Take a look at this chart...
In January it was $17.80 (first blue shaded circle) and today it’s up to over $19.00 (Second circle). This means, it is clear that silver’s safe haven status is compelling more investors to buy the metal. And this will push the price higher.
Dare I say, it has even more potential to move up than gold this year, with the positive level of investment sentiment.
Ajay Kedia, director of Kedia Advisory sums it up perfectly:
“Silver can outperform gold because it is a smaller market and moderate relocation of investment into it can lead to a material price spike. A break above $20 can see prices moving towards $26 in internationally,”
And looking at the charts, It looks like Ajay could be spot on…
My Inverse Head and Shoulders pattern points to a 35% rise in the silver price
Above, you’ll see the daily price chart of Silver.
Since the beginning of the year, it’s formed one of the breakout patterns I use to send trade ideas to Red Hot Storm Traders
It’s called an Inverse Head and Shoulders (Shaded area).
This pattern contains four main parts namely:
The left shoulder, a lower head, right shoulder and a resistance (ceiling level).
This month, we saw the pattern finally complete, and then break above the resistance at $18.90.
When the price broke above the resistance level, this attracted more buying which sent the price up further. And based on the factors I’ve mentioned today, it looks like we’re in for the next silver wave up.
If we use the High-Low calculation approach, we’ll find the next price target for Silver.
Here's the calculation:
Price Target = (High - Low) + High
= ($18.86 - $12.10) + $18.86
The next target that silver is set to hit this year is at $25.62.
550 people ALREADY have my number in their address book - and since I started SMS’ing them (Since the COVID-19 Lockdown), they've made R8,848 profit.
Now it's YOUR turn to see
how much you could make
Here are two ways I’ll profit from the 35% rise in silver
First, I can either buy Silver CFDs and hold them until it hits the target at $25.62.
I will be looking for trade ideas to send through via my Red Hot Storm Trader
Service, for companies that move up when silver does such as Anglo American, BHP Billiton, Kumba Iron Ore etc…
Analyst, Red Hot Storm Trader