Silver performed weaker than other precious metals during the panic in the banking sector, considering a higher bet of this metal compared to gold. Now the situation began changing. The financial markets are calming down. In this environment, gold is showing signs of weakness, and silver is renewing its local highs. Investors may have noticed the undervaluation of silver that was formed during the panic, and that is the reason why it is now showing outperformance.
That said, analysts' estimations confirm the undervaluation of silver compared to gold.
According to a recent survey conducted by Silver Instutute, sales of silver jewelry continue rising. The survey conducted among market participants found that 61% of retailers increased their silver jewelry inventories by an average of 21% in 2022.
Demand for the white metal is growing in other industries as well. According to an Australian study, solar cell production could consume most of the world's silver reserves by 2050. Meanwhile, investment demand for the metal surged about 18% to 329 million ounces in 2022.
The ratio of the gold price to the price of silver currently exceeds 80:1. This indicates that silver is significantly undervalued compared to gold. The average ratio in recent decades has been in the range of 40:1 to 50:1. The ratio has always returned sharply to its standard value at some point in history.
According to the technical analysis, silver started moving in the flat, which had been observed earlier for several months at the end of the last year and at the beginning of this year.
The head and shoulders pattern on the hourly timeframe noted in the previous forecast has not been realized. A breakout through the resistance level opens new upside targets near the upper limit of the rectangle. This growth will look quite natural considering the current price of gold. It's worth noting that the gold is now testing the previous local highs.
The upside target for the silver will be the level of $24.45. A stop-loss will be placed when the lower limit of the rectangle at $23.10 is broken down.
A growth of the price of silver:
Take profit — 24.45
Stop-loss — 23.10
This content is for informational purposes only and is not intended to be investing advice.