Sun shines on silver, which sizzles on solar panel demand
Silver has always been a wily beast for investors due to its dual precious metal/industrial metal uses, and 2021 sees silver rising on both. That contrasts with 2011, when a proper bubble in silver developed on rank speculation linked to a tumbling US dollar and the Fed’s seemingly radical monetary policy of QE2 from late 2010. QE scary? How times have changed.
2021 brings the usual suspects that power silver higher on its hard asset/precious metal side as the US dollar weakens, and as investors are faced with the harsh reality of no relief in sight from negative real interest rates. This is exacerbated as inflation suddenly jolts higher in 2021 and policymakers are slow to respond, wanting to offer maximum support for their still-recovering economies. With a Covid-19 vaccine in rapid roll-out by the middle of the year, the excessive liquidity and over-easy policy drives a powerful bid into any hard asset.
But the real turbocharger for the silver price in 2021, even relative to gold, is the rapidly rising demand for silver in industrial applications, especially those driving the green transformation such as photovoltaic cells used in solar panel production. In fact, a real silver supply crunch is on the cards in 2021, and it frustrates the full throttle political support for solar energy investments under a Biden
presidency, the European Green Deal, and China’s 2060 carbon neutral goal, among other initiatives.
Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver.
Trade:
Long silver as the price races to an all-time high of $50 per ounce in 2021.
2021 brings the usual suspects that power silver higher on its hard asset/precious metal side as the US dollar weakens, and as investors are faced with the harsh reality of no relief in sight from negative real interest rates. This is exacerbated as inflation suddenly jolts higher in 2021 and policymakers are slow to respond, wanting to offer maximum support for their still-recovering economies. With a Covid-19 vaccine in rapid roll-out by the middle of the year, the excessive liquidity and over-easy policy drives a powerful bid into any hard asset.
But the real turbocharger for the silver price in 2021, even relative to gold, is the rapidly rising demand for silver in industrial applications, especially those driving the green transformation such as photovoltaic cells used in solar panel production. In fact, a real silver supply crunch is on the cards in 2021, and it frustrates the full throttle political support for solar energy investments under a Biden
presidency, the European Green Deal, and China’s 2060 carbon neutral goal, among other initiatives.
Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver.
Trade:
Long silver as the price races to an all-time high of $50 per ounce in 2021.
Comentário:
After spiking to 27.60, Silver fell back to support in the 25-25.15 area, it hit a low of 25.15. We're now back above the pivotal 26.14 area. We have clear parameters going forward now: the 27.60 peak and the 25.15 support.
Comentário:
Comentário:
Problem with at least GLD is that in the fine print they reserve the option to settle in cash if you stand for delivery. That would hide any under reserve they might have.
Do not know if this is also a clause in the SLV contract.
The Custodian for SLV is JPM. It is equally to deposit your physical GME stocks to Melvin Capital and allow them to reused your stocks to short you again repeatedly. Buy PSLV as the custodian is The Royal Canadian mint. (Canada government)
Do not know if this is also a clause in the SLV contract.
The Custodian for SLV is JPM. It is equally to deposit your physical GME stocks to Melvin Capital and allow them to reused your stocks to short you again repeatedly. Buy PSLV as the custodian is The Royal Canadian mint. (Canada government)
Comentário:
No one can bat 100% but we'll know soon enough whether this is heading up to $50 directly or will take a detour down to a minimum of ~24, maximum ~19 before it launches for real. Given the enthusiasm surrounding it, IF this entire rally in Silver is erased and then some, i.e. we hit lower lows, I believe many will throw in the towel and then we will have the conditions in place for a sustainable rally to new highs and perhaps a retest of $50.
Comentário:
PSLV is a closed fund. When you buy, you might drive the paper price up but you are not increasing demand for physical Silver. The buyer just takes over ownership of the already existing physical metal from the seller. Amount doesn't change. Buying the physical metal is best.
Comentário:
This is what I’ll be looking for with respect to such a bottom in Silver:
Extreme bearishness: Everyone and their dog has given up, thrown in the towel. Massive outflows from Silver ETFs, perhaps new record outflows.
Extreme oversold: RSI near, at, or below 30.
Positive divergence: A lower low in price but a higher low in the RSI and/or MACD indicators.
Positioning: A sharp drop in the Commercials’ net short position.
I would also keep an eye on fundamentals news with regard to new stimulus and yield curve control. Keep an eye on inter-market analysis, such as real yields and the dollar too.
If these multiple tools all point upwards, you can have a greater degree of confidence that the bottom is in place or close.
Finally, taking a couple of steps back to view the bigger picture: I believe that the next major low will set us up for a truly sustainable rally to $40-50, but the risk is down to anywhere between $19-24 before this occurs to create the fuel for such a spectacular rally. Simply put, I don’t believe we’re done on the downside yet, but the further we fall, the bigger the reward that follows, IMHO.
Extreme bearishness: Everyone and their dog has given up, thrown in the towel. Massive outflows from Silver ETFs, perhaps new record outflows.
Extreme oversold: RSI near, at, or below 30.
Positive divergence: A lower low in price but a higher low in the RSI and/or MACD indicators.
Positioning: A sharp drop in the Commercials’ net short position.
I would also keep an eye on fundamentals news with regard to new stimulus and yield curve control. Keep an eye on inter-market analysis, such as real yields and the dollar too.
If these multiple tools all point upwards, you can have a greater degree of confidence that the bottom is in place or close.
Finally, taking a couple of steps back to view the bigger picture: I believe that the next major low will set us up for a truly sustainable rally to $40-50, but the risk is down to anywhere between $19-24 before this occurs to create the fuel for such a spectacular rally. Simply put, I don’t believe we’re done on the downside yet, but the further we fall, the bigger the reward that follows, IMHO.
