Prices for silver continue to rise at a rapidly. Yesterday quotes rose more by 1.3%, and today in the morning trading the level of $26 per ounce was tested for the first time since April last year. Technical indicators since late March are still in a strong overbought zone, but the fundamentals of silver attractiveness still prevail signals of the quick beginning of the correction.
Metals and minerals analyst Jeffrey Clark gave his comments on the prospects for precious metals. Clark stated the need to open long positions in the precious metals market. Price pullbacks in the current situation will be bought back quickly. A sharp collapse in all financial markets is the only risk for precious metals, but even in this case, the decline can be recovered soon.
Clark takes a positive view of silver. In recent times, silver has been steadily moving ahead of gold in terms of profitability. This year, the analyst expects silver prices to rise to $30 per ounce. The expert notes the high volatility of silver prices in case of a strong direction of trend.
The rise in silver prices can be supported by production issues. The Mexican government has proposed shortening the term of mineral concessions in the country, tightening the rules for water use licenses, and requiring companies to return up to 10% of profits to the local population. It is also planned to implement a number of other restrictions on production operations.
Currently, Mexico is the world leader in silver production with a market share of more than 20%. The head of Mexico's association of producers (Camimex) Jaime Gutierrez has a negative view on the government's proposals. They could reduce investment in the country's mineral sector by about $9 billion, which would have a negative impact on the productivity of mines.
Anyway, at least a slight correction of silver prices should take place in the near future. This would be a good opportunity to build up long positions. For silver purchases, the range of 24.6-25 should be taken into consideration, and the level of 26 will be the upside target.
The following trading strategy option can be suggested:
Buy silver at a decline in the range of 24.6-25. Take profit – 26. Stop loss – 24.
This content is for informational purposes only and is not intended to be investing advice.
