Silver is currently experiencing extreme volatility, indicating that the market sentiment is no longer uniformly bullish. Earlier in the Asian session, the price surged to new historical highs. Some analysts suggest that the price has only now decisively broken the all-time high set in January 1980. Although the futures contract price at that time closed below the $50 mark, some metrics place the daily historical peak near $52.8 per ounce.
Today, the price initially surpassed the $53 per ounce level before undergoing a 6% correction just prior to the European market open. Moments after the European start, the price rebounded, settling near the $52 per ounce level, close to yesterday’s close. Silver remains one of the most volatile metals, reacting significantly more forcefully than gold during both upward surges and drawdowns. Year-to-date, silver’s price gain is approaching 80%.
Silver’s performance this year is eclipsed only by platinum. Source: Bloomberg Finance LP
Liquidity and Risk Assessment
Market consensus points to very low liquidity in the silver market. Rates for borrowing silver for one month have surged to 30%, leading to a noticeable squeeze on short positions. The silver market itself is five times smaller than the gold market and lacks the solid demand component provided by central banks, which gold benefits from. Consequently, should a significant market correction occur, expectations are for a decline of at least ten percentage points.
Bank of America’s latest forecast projects a silver price of $65 per ounce next year, alongside a $5,000 price target for gold. Goldman Sachs anticipates further silver gains but also highlights a potential return of silver inventory to the London exchange following strong US stock builds in recent months.
Technical Outlook
Technically, the silver price is not yet as extremely overextended from its moving averages as it was in the 2011 rally. Moreover, the magnitude of the 2011 movement suggests that the current uptrend could continue towards $60 per ounce. Such a level would be justified if gold were trading at $4,200 and the gold-to-silver ratio were to fall towards 70. Technical support is currently found near the $50 per ounce level, while the nearest resistance lies just below $55 per ounce.
The material on this page does not constitute financial advice and does not take into account your level of understanding, investment objectives, financial situation or any other specific needs. All information provided, including opinions, market research, mathematical results and technical analyzes published on the Website or transmitted To you by other means, it is provided for information purposes only and should in no way be construed as an offer or solicitation for a transaction in any financial instrument, nor should the information provided be construed as advice of a legal or financial nature on which any investment decisions you make should be based exclusively To your level of understanding, investment objectives, financial situation, or other specific needs, any decision to act on the information published on the Website or sent to you by other means is entirely at your own risk if you In doubt or unsure about your understanding of a particular product, instrument, service or transaction, you should seek professional or legal advice before trading. Investing in CFDs carries a high level of risk, as they are leveraged products and have small movements Often the market can result in much larger movements in the value of your investment, and this can work against you or in your favor. Please ensure you fully understand the risks involved, taking into account investments objectives and level of experience, before trading and, if necessary, seek independent advice.
